RadioShack Insiders Buy on Stock Dip
RadioShack (NYSE: RSH), the consumer electronics retailer, was the subject of a mass of buys Wednesday as insiders took advantage of an all-time-low stock price.
According to Barron's, seven RadioShack employees purchased 220,000 shares for $556,900 on July 27.
Among those buyers were:
- CFO Dorvin Lively, who bought 25,000 shares for $63,250
- Director Robert E. Abernathy, who bought 100,000 shares for $253,000
- Director Julie A. Dobson bought 20,000 shares for $50,400
- Director Edwina Woodbury bought 15,000 shares for $39,450
- Director Jack L. Messman bought 20,000 shares for $50,000
- Director Frank J. Belatti bought 20,000 shares for $50,800
- And lastly, Director Daniel R. Feehan bought 20,000 shares for $50,000
The question may be: is this move simply a case of RadioShack insiders picking their own company apart, or is it a show of faith from those closest, believing that the company will evolve and rise again to become a giant of the electronics retail industry? The answer may fall somewhere in the middle.
RadioShack might still have the ability to roll with the times. The company built its reputation on doing just that, but at what point did it fall off the rails?
Wise minds seem to think that it was about ten years ago, when big box companies like Best Buy (NYSE: BBY) came into the game with reduced prices and later the Geek Squad. Suddenly, the ability to buy computer components became less important to consumers because they no longer had to repair computers alone. When Meijer started selling electronic goods, the game may have been as good as over for RadioShack.
The tragedy is that Radioshack still has so much going for it. The customer service remains impeccable. Of course, the running gag is that the staff is grateful to see anyone in the store. They will literally beam when you walk in, and nothing is too much trouble. This gag may be a little misguided, as Radioshack staff have always been helpful souls.
The truth is that there is nothing fundamentally wrong with Radioshack besides the inability to recognize or at least evolve with the fact that the world has gotten lazy. Electronics consumers do not want to take on projects. The majority of people don't want to build a stereo system piece by piece, carefully making sure that each and every lead will enhance the sound quality. People do not tinker with their car stereos anymore. Instead, consumers worry more about getting as many tracks onto their iPods and hard drives as possible. Convenience over quality is the order of the day.
Radioshack is a strong brand with an impressive history. But the retailer may need to evolve to avoid disappearing with Kodak. Analysts maintain that the company's weakness in the consumer electronics product category is likely to continue for the foreseeable future, but maybe those seven insiders feel optimism that is undetectable to the outside world.
On Thursday, RadioShack traded slightly higher at around $2.81.
Follow me @BCallwood.
© 2014 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.