RadioShack Corp. (NYSE: RSH) is off to a very rough start in 2011.  Its stock has only enjoyed one day of gains since the start of the year.  Yesterday brought much carnage to its shares after FBR Capital Markets downgraded the stock, and we have a pair of calls hitting shares all over again on Tuesday after news on Friday that Sam’s Club, of Wal-Mart Stores Inc. (NYSE: NYSE) will take over its kiosks which had been operated by RadioShack.  The addition of kiosks run inside Target Corp. (NYSE: TGT) stores was not viewed as enough of an offset.

There is also a concern that Verizon Communications Inc. (NYSE: VZ) getting the iPhone from Apple Inc. (NASDAQ: AAPL) will pose more loss of future business and will create opportunity cost loss when it comes to bringing in new customers to The Shack.  As consumers shift between AT&T and Verizon Stores, they are not likely to consider RadioShack their top destination.

Despite a recent report from Deutsche Bank listing “The Shack” as a possible LBO candidate this year for private equity, we have seen earnings estimates lowered by Goldman Sachs and both Moody’s and Fitch have issued debt rating downgrades all this week.

Argus also reiterated its HOLD rating this morning despite some slightly higher targets for 2010 and 2011.  Credit Suisse cut its rating to Neutral and took its fair value target to $20 per share.

Shares are down another 2.7% at $16.99 today and the stock hit a 52-week low of $16.86 today.  The new 52-week range is $$16.86 to $24.00.  Shares closed out 2010 at $18.49 and the last time it was above $20.00 was back on November 16 intraday and November 11 for a dividend-adjusted closing basis.

The carnage may not be over yet.  If Best Buy Co (NYSE: BBY) is having some softness in its retail mix, how many investors actually believe that the influx is due to major ‘grabbing-up’ initiatives by RadioShack?  The company also never did find a buyer when it was reportedly the target of some loose buyer interest.  If there was a buyer it was not for a price that Julian Day was willing to accept.

After you see drops of this magnitude in a short period of time, it is not unfair to wonder if some potential buyers might be willing to sniff around again.  The answer to that general question is likely, “Maybe, but not immediately.”  Some turnarounds just take forever to turn around.

JON C. OGG

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