RadioShack Spotted On the Brink of Bankruptcy

RadioShack (NYSE:RSH) that has always gained on its market philosophy ‘two heads are better than one’ is facing severe financial crises. The company was unable to meet its fiscal target in the second half of the year. It has to find new ways to meet its monetary difference otherwise the problems might increase. RadioShack (NYSE:RSH) is desperate to get a helping hand from any of its stakeholders; may it be their lenders or bondholders. They are also trying their luck with their shareholders or landlords to take them out of this mess. If this won’t happen the company will be heading towards bankruptcy.

RadioShack (NYSE:RSH) has opted for many new ways to meet this downfall. For the past 18 months the company has been cutting on extra cost, redecorating their outlets and most importantly finding more competent management; for now nothing is going their way. CEO Joseph Magnacca has even gone out to say that many outlets are being shutdown.

The latest statement released on behalf of the company clearly states that its financial resources are but scarce. The estimated loss of the company is worth $179.8 million within a year’s time period. For now the company has $30.5 million in total to meet all its expenditures.

The music market and the industry altogether are changing drastically. With new technologies being introduced every day, RadioShack (NYSE:RSH) has found it extremely difficult to keep up. The biggest setback faced by the company is the introduction of new and latest smartphones every day. Availability of music on the go is more accessible and convenient for the customers. Despite the fact that the company had made heavy investments in wireless devices and other such accessories, they were not able to compete with the intelligent smartphones.

There are a few areas where the company is still making heavy investments to maintain its market – most prominently, the online market. Introduction of new products, private-bands and exclusivity of items can prove to be tempting for the online buyers. Despite taking measures the company is still declining financially.

It has been reported to have had a loss of $1.35/share, which is an estimated $137.4 million, in loss. Proceeds of the company have dropped from $861.4 million to $673.8 million; thus estimated to 22%. The report predicted by market analysts also does not seem satisfactory, as further decline has been projected in the company’s shares value.

The CEO of RadioShack (NYSE:RSH) has also pointed out that the consumer market is now more interested in buying smartphones. For instance, a common buyer at this point would be more enthusiastic about the release of the latest iPhone. Intense marketing strategies are greatly affecting the company’s value. Due to the increasing mobile business, the sales at stores have declined to almost 20% since last year. These statistics clearly indicate the effect of smartphones on the RadioShack’s (NYSE:RSH) stores and are the main reason behind its financial crises.
Wednesday closed on a positive note with a 10 cents increase in the company’s shares.