On Tuesday July 26, 2011, 10:23 am EDT
By Dhanya Skariachan
NEW YORK (Reuters) – RadioShack Corp disconnected an unprofitable partnership with T-Mobile and replaced it with much bigger Verizon Wireless, sending shares of the U.S. consumer electronics chain up more than 18 percent on Tuesday.
The decision came less than six months after RadioShack alleged that Deutsche Telekom AG’s T-Mobile USA unit had “materially breached” their contract. The retailer also said T-Mobile’s product offerings were not competitive with those of other carriers.
On Tuesday, RadioShack said Verizon Wireless, a joint venture of Verizon Communications Inc and Vodafone Group Plc, would provide postpaid and prepaid wireless products and services in more than 4,300 RadioShack U.S. company-operated stores starting September 15.
“That is actually a pretty big deal,” Wedbush analyst Michael Pachter said. “Verizon is a pretty big partner. T-Mobile was a pretty small partner.”
Verizon is “three times as big” as T-Mobile, Pachter said, adding: “If you, a customer, wants to activate a handset in a RadioShack store, there is more of you who are going to activate on Verizon than on T-Mobile.”
Other industry watchers agreed.
“This trades the weak for the strong,” Janney Capital Markets analyst David Strasser said.
The T-Mobile partnership has long been a drag on the retailer’s profits and a cause of worry for analysts.
“RadioShack gave up a lot of compensation from AT&T and Sprint to carry T-Mobile, and this partnership doesn’t appear to be panning out the way management expected,” RBC Capital Markets analyst Scot Ciccarelli said in April.
The company also reported a drop in quarterly profit after weak consumer demand and cutthroat competition forced it to offer more margin-sapping discounts.
Net income fell to $ 24.9 million, or 24 cents a share, in the second quarter, from $ 53.0 million, or 41 cents a share, a year earlier.
Sales at the company, which was recently dropped from the Standard & Poor’s 500 Index, fell to $ 941.9 million from $ 962.3 million in the year-ago period.
Analysts on average were expecting a profit of 37 cents a share, on sales of $ 1.03 billion according to Thomson Reuters I/B/E/S.
(Reporting by Dhanya Skariachan, editing by Dave Zimmerman and Maureen Bavdek)
Follow Yahoo! Finance on ; become a fan on Facebook.
Yahoo! Finance: Waste Management Industry News
From our Blog
- Why You Need a Dumpster September 21, 2016
- Neighborhood Togetherness Matters & Clean Up Does, Too September 19, 2016
- What Waste Should You Recycle And Throw In The Trash? August 3, 2016
- Dumpster Rentals for Business Owners August 1, 2016
- Picking a Dumpster for Your Next Roofing Project July 19, 2016
- Consequences of Illegal Dumping and Littering July 13, 2016
- How To Dispose Of Debris? June 14, 2016
- When Is A Good Time To Clean Out Your Waste? June 13, 2016
- How to Dispose of Construction Waste May 2, 2016
- Why You Should Share Rental Dumpsters With Your Neighbors April 29, 2016
2011 2012 Announces best Call Clean Company Conference Connections Covanta diving dumpster dumpsters Energy Ewaste Garb garbage Harbors Holding Identity Inc. Industry Landfill Management Plant power Present Progressive Recycling Release Rental Reports Republic Second Services Solutions Stericycle stock Third TRASH TriTech Veolia Waste yard Year
- Dumpster Diving for Gourmet Pig Feed – Novella Carpenter July 10, 2011
- A Shout Out To Eating Garbage: Dumpster Diving on CBC September 17, 2011
- MythBusters – Dumpster Diving Trailer July 16, 2011
- Kris Kemp: Dumpster Diver August 21, 2011
- What should happen after my character gets beat up? June 6, 2011
- Frugal TV – Dumpster Diving for Coupons June 11, 2011
- Dumpster Dive (Director Commentary) September 24, 2011
- Dumpster Divers Spark Palin Probe September 11, 2011
- Can Opener? We don’t need no stinking can opener! June 19, 2011
- Auburn-Placer 1 yard dumpster June 8, 2011