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Any nerd over the age of twenty can probably remember a time he or she would frequent the local RadioShack. It was the go-to shop for electronics and geek fare, though we're talking a lifetime ago in tech years. Fast forward to today and there are reports that RadioShack is headed for a bankruptcy filing, perhaps as early as the first week of February. Sadly, we can't say we're surprised.
Citing "people familiar with the matter," The Wall Street Journal says RadioShack found itself short on cash after spending funds on a failed turnaround effort. As the chain prepares to file for bankruptcy, it's reaching out to potential lenders that could keep the company afloat.
The sources also say that RadioShack is in talks with a private equity firm about buying its assets out of bankruptcy. No deal is imminent, however, and the chain may prefer to go the traditional route of reducing its debt and restructuring its business through bankruptcy court.
RadioShack has posted losses for the past 11 quarters. In a filing, the company revealed it had $62.6 million as of November 1st, including $43.3 million in cash and $19.3 million in borrowing availability. That's not much for a chain with around 4,300 stores in the U.S.
It's sad to see RadioShack reduced to irrelevancy after getting its start with a store in Boston 94 years ago. It did well for many years, though began to fizzle in the Internet era. A Star-Telegram article written last September offers a great read on what went wrong, or more precisely, the many things that brought RadioShack to this point. In particular is a quote by Ed Fox, who teaches marketing at Southern Methodist University's Cox School of Business.
"Call it a death by a thousand cuts. RadioShack is left with all these stores and not much differentiation" from big box competitors like Best Buy, Fox points out.
Image Credit: Flickr (Nicholas Eckhart)
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