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RadioShack's CEO Steps Down

By - Source: Reuters | B 23 comments

RadioShack is now looking for a new CEO to save the sinking electronics ship.

Reuters reports that Radio Shack CEO James Gooch stepped down from his position on Wednesday. Chief Financial Officer Dorvin Lively, who joined the company as CFO back in 2006, will be the acting CEO until the board finds a successor.

Shares of the aging electronic chain have fallen more than 80-percent since Gooch took the reins in May 2011, and were down 0.8-percent at $2.54 in morning trading. The company's operating margins have diminished to 3.5-percent in 2011 from 8.7-percent in 2009, and could decline to -0.1-percent in 2012. That said, it was obviously time for a change.

"The board decided that the timing was right," said company spokesman Eric Bruner. "Moving forward with the decision sooner rather than later will help establish the right leadership to address the company's challenges."

At one time, RadioShack was a quality name brand that grew popular in the vacuum tube era. While the store offers plenty of cool gadgets and components for fixing electronics, a decline in business has forced the company to shift its focus on selling low-margin phone calling plans and smartphones such as the Apple iPhone.

But RadioShack is facing problems on two fronts. First, its name conjures up images from another era (like Singer, etc). "Radio is a concept from a hundred years ago, and a shack is a place that essentially homeless people lie in," Michael Pachter of Wedbush Securities said, adding that the company also faces a demographic challenge, as the younger crowd is not replacing the older customers.

Like Target and Best Buy, RadioShack is also facing stiff competition from the likes of Walmart and online retail giant Amazon. It's also having a difficult time in an evolving market. Despite focusing on smartphones, RadioShack isn't changing quickly enough, and seemingly has too narrow of a focus in its present state.

"There is no sign of fundamental improvement," said Morris Ajzenman of Griffin Securities. "I am absolutely not surprised (at Gooch's departure)."

RadioShack's board is now conducting a search for Gooch's replacement. This puts the company in a state of transition until a new CEO is found. The new leader will need a "unique strategic vision" to bring RadioShack into a new era full of smartphones, tablets, and other new form factors.

"(The future) depends on who they bring in and what vision they bring in for the company to turn this cruise ship around. It is no longer cruising, it is sinking," Ajzenman added.

 

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  • 2 Hide
    jordan009 , September 27, 2012 3:09 AM
    Electronic hut?
  • 9 Hide
    nebun , September 27, 2012 3:15 AM
    the main reason why they aren't doing well is because of the overpriced electronics they sell....here is an example...HDMI cable is $25 at Radio Shack, while Fry's sells the same cable with the same specs and maybe a foot or two longer for just a little over $5.....this is the main reason why i don't buy electronic components or parts from Radio Shack anymore....Fry's has everything I could find in a Radio Shack and more, also way better prices
  • -3 Hide
    ronch79 , September 27, 2012 3:54 AM
    Reminds me of AMD. Just sayin'.
  • 2 Hide
    echondo , September 27, 2012 3:57 AM
    The end of the world is near. Soon, all major corporations will be CEO-less...
  • 8 Hide
    geraldfryjr , September 27, 2012 4:48 AM
    Yep, overpriced commercial junk !!!

    Radio Shack started out with teaching electronics and kept with the DIYer in mind.
    Every year the keep cutting back on the variety of parts and charge 4 to 10 times what they are worth as it is not even a convenience to go there to buy from them anymore. :( 

    jer :/ 
  • 4 Hide
    Darkerson , September 27, 2012 5:12 AM
    They have been floundering for a long time. I used to love going into a Radio Shack and looking around at all the neat stuff. Used to.
  • 5 Hide
    gamebrigada , September 27, 2012 5:47 AM
    As an employee of a shack this is really sad. I know Radioshack hasn't been in the best financial position. But there are locations that are doing fairly well. I know everyone complains about our pricing, even I do. But with the customer numbers that we have coming, the store has to do a huge markup to have enough to profit to hold the store. Our prices aren't too bad looking at other places around our particular store though. Fry's is always a winner, but comparing us to the nearest Best Buys, and even a privately owned electronics hobby store is a joke. I frequently send customers there because I know they are gonna come back. Cables wise, HDMI is ridiculous, but compared to Best Buy, we don't even touch their tag of their most expensive 500 dollar 12 foot cable. Most other small things that customers buy frequently, we have the same or a bit lower price for a much better quality, yet people are still lead to believe that other places are cheaper. I'm not sure where thats coming from.

    Either way, stores specifically need to change. They changed the rules where they pay us pennies for our hard work, they just need to find people that are dedicated, and don't just take it as a place to get money. Our store we try REALLY hard to make it fun. Customers pick up on that and are happy to be helped by us. We frequently have our geeks drop some funny lines on their way out of the store, and they always come back, because even if we don't sell them anything, we helped, and they had fun, so next time they need something quick, they will come buy it from us. We're just down to earth people that aren't taught to spoon feed you that our products are amazing and you should buy them. We understand our standing, and make recommendations from there. I think thats what Radioshack needs to start doing. Right now the customer base is really fairly pissed off. If you get customers to leave happy now even empty handed, when they need something later, they will be glad to come back and actually buy something.

    -Best store in our district, and frequently get appreciation letters from our customers sent to corporate. They never take much notice though.....

    Just my 2 cents....
  • 2 Hide
    goodguy713 , September 27, 2012 7:21 AM
    i used to shop at radio shack a lot too.. but the stores are so limited as far as selection that its pretty much a niche store any more.. you can buy phones pretty much any where and .. you can even get an iphone through virgin mobile with out a contract on a much cheaper plan .. my point is i actually wanted to consider buying stuff from radio shack even looked online at there web site looking for deals on pc parts and there selection was highly over priced and dated .. how a company like that plans to be embraced by the general population ... is beyond me. they lack innovation .. even giant chains like best buy have painful issues and they are in a much better position to compete with places like radio shack how ever there is a frys electronics near where i live and i would rather go to them any day of the week then go to best buy or radio shack because they have a much better selection and better prices .. also its one of the few places you can go and buy pc parts that are not at 20 to 40 percent markup like some of the smaller shops try and pull.
  • -1 Hide
    freggo , September 27, 2012 8:40 AM
    Funny how things come eventually back to do you in.
    In the late 80 their "Incredible Universe" stores forced and bullied countless computer shops out of business.
    Now the geeks have turned the table and, via Amazon, Newegg and friends, Radio Shack may be on it's way out. Not much of a loss.
  • 2 Hide
    Onus , September 27, 2012 10:25 AM
    I have no idea how many CK-722, 2N3904/2N3906, 2N2222 and other transistors and discrete components I bought there in my teens; hundreds I'm sure. Somewhere I may still have a bunch of Forrest Mimms III project books. Jim Gach, if you're out there, I wish you well (he was the local store's manager, and let me help them stock parts a couple of weekends; I was paid in parts, so it was a cool deal for a 15-yr old). The free battery cards have long since mouldered, but I probably still have a couple of their flashlights too, often gotten free from coupons in the Sunday paper around Christmas. Getting their new catalog was a summer highlight.
    I know things change, but I will miss them if they go.
  • 2 Hide
    wannabepro , September 27, 2012 12:03 PM
    Way too overpriced.
  • 0 Hide
    Old_Fogie_Late_Bloomer , September 27, 2012 1:09 PM
    You go in there looking for a breadboard or something, and then you price-check it online...of course they're sinking! I get that retail stores have overhead, but seriously...
  • 0 Hide
    f-14 , September 27, 2012 2:08 PM
    a bunch of CLUELESS old foggies whining about the name of the store and basically displaying their lack of knowledge of marketing.
    radio shacks lack of new and current best tech has been what's hurting them since mp3 debuted. they still sell vacuum tubes but not bios chips. cd players but not mp3 or flk players. basically all the electronics that best buy sells and more.
    walmart and best buy are not the main competitors of it's core business, that is the internet, ebay steals far more customers than the other two, heck best buy is going down the same route once it got away from keeping physical media in it's stores and did not jump on the digital revolution with online and retail digital distribution while still charging obscene prices for all of it two of the biggest marketing sales fails you can make in retail.

    they reap what they sow. stop hiring people with mba's in business and start hiring tech visionaries, an MBA is what you hire to do all the medial work to get product in your supply chain and work the stores, not make CEO. and that is the problem with most corporations today
  • 2 Hide
    Antimatter79 , September 27, 2012 2:43 PM
    I used to love going to Radio Shack which started when my stepfather managed a store back in the 80s. I have only been to a store maybe twice in the last 5 years, once to buy a long RJ-11 cable, and once to buy a Roku XD, so I'm guessing my $95.00 over 5 years ins't helping much. Maybe they should seek (beg for) a merger deal with Micro Center, a store that just appeals to a larger tech-oriented crowd. Micro Center is my new Radio Shack, and has been for a number of years, actually I guess around the time I lost interest in Radio Shack. I still have fond memories of my Trash-80 CoCo 2 and Tandy 1000 EX, though.
  • 0 Hide
    cscott_it , September 27, 2012 5:22 PM
    ronch79Reminds me of AMD. Just sayin'.


    Eh - Except AMD recently had a bit of a "staff culling" and has pulled in some talent. Of course, it will take 3(ish) years to realistically see the benefits. I'm hopeful - I don't want to see AMD leave the x86 market.
  • 0 Hide
    back_by_demand , September 27, 2012 5:25 PM
    Quote:
    Radio is a concept from a hundred years ago, and a shack is a place that essentially homeless people lie in

    Explain the market success of Pizza Hut then
    ...
    But seriously, it's not the name, it's the competition from online and bricks & mortar, the only thing that will save Radio Shack now is moving to an online-only presence, sure it will cost jobs but so will going Chapter 11 and that is a lot worse
  • 1 Hide
    dark_knight33 , September 27, 2012 5:46 PM
    back_by_demandExplain the market success of Pizza Hut then...But seriously, it's not the name, it's the competition from online and bricks & mortar, the only thing that will save Radio Shack now is moving to an online-only presence, sure it will cost jobs but so will going Chapter 11 and that is a lot worse


    That kind of thinking would wreck the company. How many people still buy from "Circuit city"? They went online only, in a round about way. It hasn't helped. Radio shack is making mistake after mistake after mistake. Cellphones and tablets are not the way forward. Kiosks and online stores sell crap like that cheaper with lower overhead, and stores like best buy sell it for more, but with better service. There is no room for radio shack to get into that market. They need to ditch the phones altogether, keep the focus on low cost accessories, batteries and other hard to find items. They need to move into new markets like the DIY market they used to be in. Think about if they started selling items like the arduino, or raspberry pi. They would instantly become a beacon for the hacker crowd. You would be able to buy at retail what you could only get online before. They need to move away from a million little stores and adopt a micro center like Mega store approach. Focusing on doing business where companies like micro center and frys arent.

    They just have no vision, and should hire me to show them the way. Even better, I'd do it for less money than what their current leadership is asking, and tie my pay directly to company performance.
  • 0 Hide
    dark_lord69 , September 27, 2012 6:35 PM
    Radioshack
    "You've got questions we've got answers."
    For me it's more like:
    "I've got questions they can't answer."

    1. They should call it Revolution and keep the big red R.
    2. Forget tiny margin cellphones and tablets. Move into specialized deals. It's simple, America loves a good deal and hates feeling like they've been ripped off.
    Example: Blockbuster vs Netflix and redbox. 2 movies at blockbuster is the same as an entire months' membership at Netflix or 8 movies at redbox.
    Example 2: Just read the posts comments to this article and it's easy to see that public opinion of Radioshack is in the toilet due to insane prices.
    Example 3: The last time I was in a Radioshack looking for a car charger for my cell phone. They had a "DEAL" (LOL) if you buy a USB car charger and a USB to micro (or mini) USB adapter you can get them togeather for ONLY $30!!!!! OMFG!! WHO ON THE PLANET THINKS THAT THIS IS A GOOD DEAL!!?? Fast forward 1 week, got a DUAL PORT USB car charger and !THREE! USB charging cables for $12 including shipping on Amazon. Fast forward 2 more weeks. I was in walgreens the other day and even walgreens had better prices! They were selling the same style USB car charger and USB charging cables for only $5 each.

    The bottom line is that america LOVES a good deal. Americans like to brag about how low of a price they paid, as if they got some specialized deal that no one else could get (Just look at black friday specials and it's easy to see.) When I mentioned specialized deals I ment selling VERY few items in your stores after all it's small enough to be called a shack... Just sell the items that you can sell at a crazy insane no one can beat that price low price. Rare deals with limited quantitys. Focus on selling those products and showcasing why they are the best product for the money. That would make up the main focus of the store and the rest could be filled with legacy parts for electronics like resistors and whatever else.

    Example of this: get rid of the 14 different sized TV's at crazy high prices that never sell and just sell 2 or whatever you can get an awesome deal on. 1. 32" HDTV with all the newest features for $169 and sell a 55" same awesome features for $449.

    The profit margins may be much smaller but the volume of HDTV's sold would be UNBELIEVABLE!
    It's like McDonalds selling the "McDouble" for $1. You know they aren't making much money on it but how many of those do you think they sell everyday?

    By the way, this is my offical application for the CEO position. Someone contact the radioshack board of directors for me and put in a good word.
  • -1 Hide
    dark_knight33 , September 27, 2012 6:56 PM
    dark_lord69''By the way, this is my offical application for the CEO position. Someone contact the radioshack board of directors for me and put in a good word.


    Unoriginal = lame.
  • 0 Hide
    AM2A , September 27, 2012 7:01 PM
    dark_knight33That kind of thinking would wreck the company. How many people still buy from "Circuit city"? They went online only, in a round about way. It hasn't helped.


    Circuit City is now a part of Tiger Direct / CompUSA. I still buy a fair amount of stuff from Tiger/Comp/Circuit, whatever you want to call it. There's a physical store about 20 minutes from where I live.
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