Even hardened press-release veterans have to wince at this one. Is this really a "powerful confirmation of your retailing services strategy"? You don't think it's reaching to describe the RadioShack deal as a "turnkey retail solution that leverages its own infrastructure in the areas of design and construction, distribution, merchandise selection, store operations, and hiring and training"?
Pardon me, but it sounds a bit more like you're providing products and warm bodies. Not that there's anything wrong with that. But what's in it for you? What's in it for the shareholders?
For that we need to consult the other press release. Yes, yes. Very interesting. Turns out RadioShack wasn't exactly wooed on the strength of its turnkey retail solution. (It's been operating Sprint
What did it cost? No word. There's only the projected fallout for 2004, which predicts a reduction in free cash flow (FCF) of about $35 million, or roughly half the FCF expected for the year. That might sound expensive, but what will shareholders be getting in return?
Also tough to say. The release mentions that wireless sales at Sam's came to $150 million last year. That would have added about 3% to RadioShack's $4.6 billion top line. It would have chipped in a bit less than 10% to the company's booming sales of Motorola
We've reviewed how RadioShack has been doing an amazing job squeezing earnings out of meager sales growth. Predictions for next year offer more of the same, meaning investors should temper their enthusiasm by asking themselves, as I have in the past, how long the party can continue.
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Seth Jayson wishes his local RadioShack carried that 50-watt soldering iron he keeps seeing in his dreams. At the time of publication, he had long positions in Nokia, but no other company mentioned. View his stock holdings and Fool profile here. Fool rules are here.