Wedbush Says RadioShack Corp. Stock Now Worth Zip

RadioShack Corp.

is likely to enter bankruptcy proceedings that will wipe out shareholder equity, according to an analyst who cut is target on the stock to zero Tuesday, from $1 a share. "The ship is sinking," Wedbush's Michael Pachter said in a note which, unsurprisingly, also reiterated an Underperform rating. The Fort Worth, Tex.-based retailer is slated to post quarterly results Thursday, and Pachter thinks it won't be pretty. Although Wall Street expects a quarterly loss of $0.36 cents a share on revenue of $893 million, Pachter is calling for a loss of $0.66 cents a share on revenue of just $762 million. "Its primary business is as a consumer electronics convenience store," Pachter said. "But the Internet is more convenient." RadioShack in May failed to obtain consent from its lenders to close up to 1,100 stores. Its credit agreement permits closing 200 stores per year -- the company's present goal. With operational decisions now vetted by creditors, "equity investors are no longer relevant to management decisions the creditors clearly are in control," Pachter said, adding that a bankruptcy filing "is imminent." RadioShack was reportedly in talks last month with major shareholder Standard General LP over a rescue package that could avert bankruptcy. The shares rallied more than 100 percent, but no announcement has been forthcoming and Pachter didn't comment on the prospect. Pachter's not the first analyst to declare RadioShack worthless. In June B. Riley's Scott Tighman put a zero target on the company, citing similar concerns. After hours Tuesday, RadioShack changed hands recently down 11 percent to $0.83 cents a share.