RadioShack Delivers in Q3

RadioShack Corp. (RSH - Analyst Report) announced its third quarter results today. Net revenues came in at $990 million, down 3.1% year over year. However, this was better than the Zacks Consensus Estimate of $981 million. The year-over-year reduction in sales is primarily due to a 2.9% decline in comparable same-store sales for company-operated stores and kiosks in the reported quarter compared to the prior-year quarter.
 
Segment wise, revenues from company-operated store declined 3.5% year over year, Kiosks sales declined 17.8% year over year, whereas revenues from Other services increased 13.5% year over year. Acquisition of RadiosShack de Mexico in December 2008 has significantly contributed to the Other services segment. Product category wise, sales declines in digital-to-analog converter boxes, laptop computers, batteries, wireless accessories, and GPS products. 

On the other hand, the company generated increased revenues from Sprint Nextel Corp. (S - Analyst Report) postpaid wireless business, increased sales of prepaid wireless handsets and airtime, the addition of T-Mobile, a division of Deutsch Telekom AG (DT - Analyst Report) as a postpaid wireless carrier, and increased sales of netbooks.
 
GAAP net income, in the third quarter, was $37.4 million or 30 cents per share compared to a net income of $49.1 million or 38 cents per share in the year-ago quarter. This was in line with the Zacks Consensus Estimate of 30 cents per share.
 
Quarterly gross profit was $471.1 million compared to $477.4 million in the prior-year quarter. However, gross margin was 47.6% in the reported quarter compared to 46.7% in the same quarter of the previous year. This is mainly due to a favorable sales-mix for the high-margin products. Quarterly Selling, General, and Administrative expenses were $380.7 million compared to $370.4 million in the year-ago quarter. Operating income for the third quarter was $69.4 million, or 7% of sales, compared with $84.9 million, or 8.3 % of sales in the same quarter of last year.
 
At the end of the third quarter, RadioShack had $856.7 million of cash & cash equivalent compared to $824.1 million at the end of the prior-year quarter. Total debt, at the end of the same quarter was $687.7 million compared to $685.7 million at the end of the year-ago quarter. During the third quarter, the company consumed (negative cash generation) $19.8 million of cash for operations and capital expenditure was $18.2 million.

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