United Online (NASDAQ:UNTD) is about to get another channel for distribution. Today, it came to light that its budget ISPs, NetZero and Juno, will be offered through 5,000 RadioShack (NYSE:RSH) storefronts. It's yet another way to try to shore up dropping dial-up subscriber numbers, but United still has its work cut out for it.
United needs to do all it can to make sure it can continue to woo subscribers to its low-cost ISPs. After all, even the once-mighty America Online, now a division of Motley Fool Stock Advisor pick Time Warner, has seen substantial subscriber defection as dial-up has become increasingly passe in favor of high-speed lines.
After all, every time you turn around, somebody's offering high-speed connections -- not just Internet bellwethers like Yahoo! (NASDAQ:YHOO), but also cable companies like Comcast (NASDAQ:CMCSA) and phone giants like Verizon (NYSE:VZ).
Last quarter, United Online added 203,000 paid subscribers to its service. Considering the current environment for Internet services, that's a positive sign. However, that number was 11% less than the number of subscribers it added in the comparable quarter last year, showing a slight slowdown in subscriptions.
Of course, that's perfectly in keeping with United's warnings in its regulatory filings: "While we currently anticipate that our pay subscriber base will continue to increase in the near term, we do not anticipate that the growth in pay access subscribers will be comparable to what we experienced in year-ago periods." Uh-oh. The writing's on the wall, then, unless United can find more channels to lure bargain-hunting potential subscribers.
That's where this deal comes in. While it underlines the importance of trying to stave off subscriber defection in light of the competitive climate, it's not as high-profile as United's relationship with Best Buy (NYSE:BBY). After all, RadioShack's no Best Buy. While it has shown surprising popularity recently for cell-phone sales, its real backbone consists of electronics odds and ends, a possibly questionable niche.
Let's just add that the press announcement's declaration that this is the first "value ISP" offered through RadioShack requires some reading between the lines. Last October, a big-time rival, EarthLink (NASDAQ:ELNK), began offering its Internet services through RadioShack. Seems to me there may be a few too many crowded into the Shack.
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Alyce Lomax does not own shares of any of the companies mentioned. When she thinks of RadioShack, it's difficult for her not to think of Pong, the old video game.
