FORT WORTH, Texas-Citing disappointing wireless sales, RadioShack Corp. posted a 13-percent drop in net income during the first quarter from $68.3 million last year, or 41 cents per share, to $55 million this year, or 34 cents per share. The results were at the high end of the company’s previously reduced earnings estimates for the first quarter and just below analysts’ forecasts of 32 cents per share.
RadioShack currently sells wireless services from Verizon Wireless, Sprint Corp., Virgin Mobile USA L.L.C. and Tracfone Wireless Inc.
“We are disappointed that our business did not perform as we originally expected during the first quarter,” said David Edmondson, president and chief executive officer-elect of RadioShack. “Our profits were lower due primarily to underperformance in the wireless business within our core RadioShack stores.”
Analysts noted that while total wireless unit sales were up at RadioShack locations, the average selling price of services was down. RadioShack added that its sales mix shifted from postpaid to prepaid during the quarter, which could be good news for prepaid operators Virgin Mobile USA and Tracfone and indirectly for Sprint, which sells wholesale minutes for Virgin Mobile USA.
RadioShack lowered its first-quarter forecasts earlier this month due to lower-than-expected revenues from its wireless sales. Analysts noted that the company was not reacting to a greater influx of customers looking to take advantage of increasingly popular family plans, as well as small but growing interest in high-speed wireless data services.
