Subject: [NEXTEL-1] RadioShack Cuts Outlook, Drags Sprint PCS

From: Marcel <[email-masked]>
Date: Fri, 03 Jan 2003 15:28:31 -0500

http://biz.yahoo.com/rb/030103/retail_radioshack_outlook_2.html

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Reuters

RadioShack Cuts Outlook, Drags Sprint PCS
Friday January 3, 12:14 pm ET

By Ellis Mnyandu

NEW YORK (Reuters) - RadioShack Corp. (NYSE:RSH - News), the No. 3
U.S. consumer electronics chain, on Friday cut its
fourth-quarter profit outlook, citing slower sales growth and
lower-than-expected margins on wireless phones and other key
products.

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However, RadioShack's stock edged higher as investors had
probably braced for worse news after a slew of such industry
warnings that had devastated electronic retailing shares last
month, one analyst said.
Still, concerns persist about RadioShack's large
inventories, which could lead to an increased level of
promotions to clear shelves for newer products, said David
Schick, an analyst at SunTrust Robinson Humphrey.
"We do believe there's pressure on the business," said
Schick, who does not own RadioShack stock and has an
"underweight" rating on it.
He noted that a slowdown in the Sprint PCS wireless
business, which is key to RadioShack's profits, could hurt the
Fort Worth, Texas-based company over the long term.
RadioShack, the nation's largest seller of wireless phones
and accessories, said it now expects to earn 58 cents to 60
cents a share for the quarter ended Dec. 31, below its initial
estimate of 63 cents to 68 cents a share.
This lags analysts' consensus forecast of 65 cents, with
estimates ranging from 63 cents to 68 cents, according to
research firm Thomson First Call. A year ago RadioShack posted
a fourth-quarter profit of 67 cents a share.
RadioShack Chairman and Chief Executive Leonard Roberts
blamed "a weak consumer environment" for the profit shortfall.
Products that the chain had hoped would boost the critical
holiday quarter fared poorly, including wireless phones,
radio-controlled toys, home entertainment accessories and
specialty batteries, he told analysts in a conference call.

PHONE ACTIVATION SNAGS
RadioShack President and Chief Operating Officer David
Edmondson said a push to bring customers into stores to
manually activate new phones -- which caused delays -- hurt the
Sprint business. The retailer is now working with Sprint on a
system to activate phone accounts online by the end of the
first quarter.
"We remain optimistic that Sprint will be a viable growth
product for us. We did have a disappointing quarter with them
in the fourth quarter," CEO Roberts added.
RadioShack also said the Verizon business was "certainly
not a disappointment" in the quarter just ended.
RadioShack sells Sprint PCS and Verizon wireless phones and
services at more than 7,200 outlets. Verizon Wireless (NYSE:VZ - News)
and Sprint PCS (NYSE:PCS - News; NYSE:FON - News) are the nation's No. 1 and No. 4
wireless phone firms, respectively.
Sprint PCS shares fell almost 7 percent or 33 cents to
$4.46, and Verizon was unchanged at $40.17 on the New York
Stock Exchange at midday.
RadioShack's warning came after market leader Best Buy Co.
Inc. (NYSE:BBY - News) warned last month that slow sales would also crimp
its fourth-quarter earnings. U.S. consumers, worried about a
possible Iraq war and the sluggish economy, cut back on
spending this past holiday season.
RadioShack said, however, it still expects annual earnings
per share to grow 13 percent to 15 percent through 2005.
RadioShack's stock edged up 24 cents, or 1.24 percent, to
$19.57 on the NYSE, after falling 37 percent in 2002.

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4.37
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+0.15

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