TigerSoft
News Service 3/28/2008 www.tigersoft.com Radio Shack's Sad Decline.
A Microcosm for What's Happening To America:
Ignorant, Cynical, Over-Paid CEOs and Under-Paid Workers..
-------------------------------- by William Schmidt, Ph.D. ----------------------------------------
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RADIO SHACK's SAD STORY
A Microcosm for What's Happening To America:
Ignorant, Cynical, Over-Paid CEOs
and Under-Paid Workers.
Its CEO is paid $1 Million /yr.. He Seems Genuinely
Trying To Kill His Own Company.
He says: "I'd like to capitalize
on the store's strong points, but I honestly don't know what they are".
"I may never know the answer. No matter how many times
I punch the sales figures
into this crappy Tandy desk calculator, it just doesn't add up."
( http://www.theonion.com/content/news/even_ceo_cant_figure_out_how
)
“Cost cutting is not a sustainable strategy
for growth.”
$5.90 an hour plus commissions brings a very high turn-over
and employee low morale
Radio Shack Psychological Test for New Employees
"It is always wrong to steal: Yes or No."
(Not if you're the CEO!)
The stock of Radio Shack (RSH) peaked in 1999 at 80 and it has been in decline since.
In August 2006, Radio Shack picked a new CEO, Julian Day, to cut costs and revive its
stock.
Julian Day was an Englishman who had previously worked with Thompson McKinsey, the
management consultant firm and Chase Manahattan. In 2002 he was made CEO of K-Mart.
He was the hatchet-man. He cut $59,000 jobs, closed 599 stores and sold a lot of
valuable real estate.
K-Mart emerged from Chapter-11 retailer and merged with Sears. In return, Julian Day got
bonuses
and stock options worth an estimated $84 million.
In July 2006, Day was brought in to be the CEO of Radio Shack to achieve the same results
for its shareholders. His fame on Wall Street brought a rush by short sellers to
cover their short sales.
RSH broke its down-trendline and rallied back up to the 34-35 level that had previously
stopped
two other advances, back in 2004 and 2005. Once again, simply using a ruler with a stock's
charts and applying standard technical analysis principles of broken price-trendlines,
resistance
and support. The TigerSoft charts add the Tiger Accumulation Index, automatic Buys
and Sells
and key moving averages
Julian Day used a meat cleaver approach. He seems to have relished his image of
being brutally direct.
A month after taking charge, Radio Shack announced that it would cut 400 to 450 management
jobs
and closed nearly 500 stores, just as he had done at KMart. He had his terrified
minions send out no pink slips.
They used E-Mail rather than face-to-face meetings with those that were leaving.
Some had worked for the
company for twenty years. The kindest observers term his approach as "slash and
burn". Radio Shack
still has more than 6,000 locations and gross revenues of more than $4.5 billion.
But for how long?
Even with a Hollywood smile,
CEO Julian Day Is Just Another Overpaid Axe-Man
at The Top. He Readily Admits He Has
No Vision.
At least he is honest about his limitations as CEO. Despite having been CEO of Radio
Shack for
nine months, he told analysts that he still has "no idea" how the home
electronics store manages to stay open.
"There must be some sort of business model that enables
this company to make money,
but I'll be damned if I know what it is," Day said. "You
wouldn't think that people still
buy enough strobe lights and extension cords to support an entire nationwide chain, but
I guess they must, or I wouldn't have this desk to sit behind all day....
Should This Man Be CEO?
Sales just declined for the sixth quarter in a row, sliding to $1.36
billion from $1.46 billion.
Analysts on average had expected a profit of 72 cents a share on revenue of $1.35 billion.
"Have you even been inside of a RadioShack recently?" Day asked. "Just
walking into
the place makes you feel vaguely depressed and alienated. Maybe our customers are at the
mall
anyway and don't feel like driving to Best Buy? I suppose that's possible, but still, it's
just...weird....
"Even the name 'RadioShack'—can you imagine two less appealing words placed next
to one another?"
Day said. "What is that, some kind of World War II terminology?
Are ham radio operators still around, even? Aren't we in the digital age?"
( http://www.theonion.com/content/news/even_ceo_cant_figure_out_how
)
Here's a quote
from an employee on the Yahoo board for Radio Shack.
"In order to make our day tomorrow, I suggest we fire
Julian Day.
He has depleted my store inventory, cut my pay, and forced me to send employees
home thus leaving the store short staffed. Since he has taken over this company, our
prices
have been raised to a level that we are no longer competitive, the quality of our products
have dropped, our customer service department has been pawned off to us at the store,
and normal store upkeep (window cleaning, carpet shampooing exc) have been out
of the question. I also suggest that Radioshack as a whole takes a good long look
in the mirror. All Tenured managers are leaving and it is getting harder to keep
knowledgeable sales associates around as you can no longer live off the money
you make here. The one asset this company does have is good employees, but because
corporate has cut our pay and the crap we have to go through is getting ridiculous
most of these people are leaving."
Radio Shack: A Lesson in Corporate
Self-Destruction
Even Wall Street observers, who are simply interested in the bottom line, feel the
Englishman is
out of touch and has a very short-term orientation. Morale is low. There are
too few employees in many
stores. (I went into one last night. Only one employee was there to wait on five or
six customers. Customers
walk out when they get annoyed. And they don;t come back. The pay is now $5.90
an hour plus commissions.
Pay has been cut recently to as close to minimum wage at is possible. Turnover is
naturally very high.
And many Radio Shack employees can't answer the questions you might ask them. Radio
Shack
does give its employees valuable training in electronics. But after a few months'
expose to wage exploitation,
most employees leave. (Go into your local Radio Shack store. You'll find that the
employees there
are quite ready to tell you how they feel about their CEO's penny-pinching, meat cleaver
philosophy.
"Visits to RadioShack stores helped convince
Bank of America analyst David Strasser
to slap a "sell" rating on RadioShack this month. In addition to having concerns
about the continued
deterioration of the cellphone business and the impact of advertising reductions, Strasser
told
clients that cuts in commissions and benefits "have
hurt employee morale and
decreased store employees' willingness to aggressively cross-sell products."
""Running the company for cash and margin rather than retailing success
does not seem like a viable long-term strategy,"
wrote Carol Levenson,
research director at Gimme Credit.
( http://www.leanblog.org/2007_07_01_kanban_archive.html
)
A Personal Note Another employee: -------------------------- How
To Trade Radio Shack's Stock ---------------------------------- |
