Radio Shack Survives on Converter Boxes

According to a recent report in the Wall Street Journal, Radio Shack recently announced its first quarter financial report. In a time when most companies see good news as a smaller loss than expected , Radio Shack posted an 11% increase in income over last year. According to the article, if you take out the cell phone and digital TV converter box sales, however, the company would have showed a loss.

Converter box sales accounted for about $70 million of the quarter’s revenues, compared with $200 million in sales for all of 2008. Total income for the quarter was $43.1 million, so it’s clear that these sales likely played a large role in the income.

The problem is that it’s not clear what Radio Shack will do after June 12 when the converter box sales will start to dry up. The cell phone companies are working aggressively to make sales on their own, without the help of third-party retailers like Radio Shack. And with the recession, consumers are less likely to buy the electronic geegaws that make up so much of the Radio Shack inventory. The company has already all but abandoned efforts to transform into an HDTV store (not that the profits on those products are great shakes in the first place). So I continue to be skeptical about the company’s future. If CompUSA and Circuit City couldn’t make it, I don’t see how Radio Shack is going to succeed. Unless they can pull another high-tech rabbit out of the hat, the future could be grim.