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RadioShack's CEO Steps Down

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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