It's all over but the speculative trading. Sharper Image (NASDAQ:SHRP) filed for Chapter 11 bankruptcy this morning, sending its already battered shares down another 65% at the open.

With the end result likely being Nil City as the company reorganizes, penny-stock traders had better know what they're getting into. Buying companies in Chapter 11 is like paying a vocal coach to teach your pooch to sing. It may be entertaining for awhile, but at the end of the day, you've wasted your money and you'll still need earplugs.

Once creditors are done compromising, the nerd-spectacled phoenix that arises from this muck will likely come from the ashes of scorched common shareholders.

The failure of Sharper Image isn't really news. The company has been telegraphing its demise for some time now. Between burning through four CEOs over the past two years and its free-falling comps, this was never going to be a feel-good story.

Even if you kept far away from Sharper Image, there are a few lessons to be learned here:

  • Apparently, there aren't too many rich geeks outside of Silicon Valley to support a 184-unit chain of gee-whiz gadgetry.
  • The whole "SkyMall catalog in a suburban shopping mall" concept doesn't work on terra firma. It may have something to do with the lack of cabin pressure.
  • If you throw RadioShack (NYSE:RSH) and Best Buy (NYSE:BBY) into a blender, the public isn't going to suck down the chunky smoothie that oozes out.
  • You can corner the market on massage chairs, air purifiers, and felt putting greens, but it isn't much of a market worth cornering.

Sharper Image failed. The kitschy retailer "intends to continue to conduct business as usual while it devotes renewed efforts to resolve its operational and liquidity problems," but "business as usual" at Sharper Image is the problem.

The world has passed it by. It may have been ahead of its time in some regards. Sure, it was one of the first retailers to sell iRobot's (NASDAQ:IRBT) Roomba vacuum-cleaning automatons. However, these days you can find those spiffy orbs at places like Target (NYSE:TGT) and Lowe's (NYSE:LOW). Digital voice recorders? Get thee to an office supply store near you. GPS, iPod accessories, and digital cameras? Best Buy is the place for you.

Sharper Image is still operating as if it's an island. Consumers know that they can pick up the same USB vinyl record turntables at (NASDAQ:AMZN) for less. Maybe it's just my experiences in Miami, but I never went into a Sharper Image where I saw anyone but foreign tourists heading to the register. For locals, it's a free museum. Just about the only thing that Sharper Image has done right in recent years is deal with inventors and tech-bent upstarts for product exclusivity on some lines. What kind of flexibility it will have on that front after its creditors make their concessions remains to be seen.

Sharper Image, as common shareholders know it, is about to be history. If it's serious about conducting "business as usual," it will be just a matter of time before it becomes history for mall landlords, too.