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RadioShack Kicking Out T-Mobile for Verizon

Reuters reports that RadioShack has kicked T-Moble USA out of its stores in favor of a more profitable wireless carrier, Verizon Wireless.

The news arrives six months after RadioShack alleged that T-Mobile USA had "materially breached" their contract and that the carrier's product offerings just weren't competitive enough to stand up against local rivals like AT&T and Verizon. Just recently the latter wireless carrier began offering the CDMA version of Apple's highly-coveted iPhone 4 – a smartphone that T-Mobile does not currently offer here in the States.

Still, Radio Shack would not reveal how T-Mobile breached its contract, but merely indicated that terminating its relationship with the carrier was a simpler, faster and cheaper solution to the problem than taking the legal route. Its new deal with Verizon Wireless will begin September 15 and bring postpaid and prepaid wireless products and services to more than 4,300 Radio Shack locations nationwide.

"That is actually a pretty big deal," Wedbush analyst Michael Pachter said, adding that Verizon is a pretty big partner – three times that of T-Mobile USA, in fact. Verizon's larger customer base will be a "boon to the retailer" who apparently has been struggling with weak sales despite its "ubiquitous" nature.

According to Reuters, quarterly profits dropped after weak consumer demand and "cutthroat competition" forced RadioShack into offering more "margin-sapping" discounts. Net income fell to $24.9 million in the second quarter, a dramatic fall from the $53.0 million it claimed in the same quarter in 2010. Sales at the company fell to $941.9 million from the $962.3 million seen in the same period last year. Yet just the mention of its upcoming partnership with Verizon has already jacked up RadioShack's shares a hefty 19-percent.

RadioShack has reportedly been trying to counter weak demand for converter boxes, antennas and other accessories by selling wireless devices and calling plans. And while analysts are optimistic about its new venture with Verizon Wireless, there's concern that the electronics retailer needs to re-brand itself as a destination for mobile phones and cater to younger customers who are unfamiliar with the seemingly forgotten chain.

Back in August 2009, RadioShack tried to re-brand itself as "The Shack" in an attempt to reel in new customers on a more personal level. "Trust is a critical attribute of any successful retailer, and the reality is that most people trust friends, not corporations. When a brand becomes a friend, it often gets a nickname — take FedEx or Coke, for example. Our customers, associates and even the investor community have long referred to RadioShack as 'The Shack,' so we decided to embrace that fact and share it with the world," said Lee Applbaum, RadioShack's chief marketing officer.

To our knowledge, The Shack is currently only used on the company's web blog – even the weekly ad doesn't use the hip "The Shack" name anymore.

  • Hellbound
    People still purchase from Radio Shack? I live near a Frys and Best Buy. I never go to my neighborhood Radio Shack.
  • XD_dued
    HellboundPeople still purchase from Radio Shack? I live near a Frys and Best Buy. I never go to my neighborhood Radio Shack.
    I don't even live near fry's or best buy and I still don't use radio shack...
  • mcd023
    I bought 1/4" to 1/8" adapter once from there. it was like $8. back to Wally-World
  • RazberyBandit
    I still go to Radio Shack when I'm in a pinch for the things I used to always buy there - A/V cables, adapters, speaker wire, etc. Otherwise, I shop online. Of course, I'm also a bit of a DIY audio hobbyist, so they do get regular business. Best Buy certainly doesn't carry the necessary components to build your own speaker crossovers.

    I pretty much despise the "big-box" stores, mostly due to the majority of their staff lacking technical expertise and knowledge.
  • sykozis
    The name "RadioShack" doesn't really invite most people into the store. Their prices are rarely competitive and most of their stock isn't stuff you'd find at a typical electronics store. They carry a lot of "store brand" and off-brand items that lack the quality most people want or expect. Their "associates" lack the knowledge needed to provide customers with proper advice. For me, I have the choice of going to the mall, or going to a rather questionable area to get to a RadioShack store. So, I get either the inconvenience of having to walk through a shopping mall and fighting with the crowd. Or I can go to a questionable neighborhood and hope someone doesn't break into my car or shoot me while I'm sifting through all the crap nobody wants to find what I need. Maybe if RadioShack were to move into better areas and start carrying items that people are most likely to buy, as well as promoting a better company image, they'd be more attractive to younger customers.

    P.S.: Hey RadioShack....AOC TV's are garbage and their "warranty" is even worse. Try selling a brand that actually has quality control and a real warranty!!!
  • K-zon
    Verizon seems to be better carier for many interests at times, when interests come to be, but yet AT&T is harder one of interest to find, even though its all around to say???

    Otherwise if anything of anything, its once less store with a service, so for service, wha should be expected of it, since it no longer carriers a interest of use anymore? Hard saying.

    But of it now though, going to RadioShack for maybe some if not many, can now use Verizon, right? More then before, kinda either way on "ways".

    I have slight partial in the issue myself, so im trying to refrain from some use of opinion.
  • bustapr
    Why would you want 2 AT&Ts in the same shop. I think thats a smart move.
  • weakerthans4
    Radioshack blows. I know, I worked there for years. It's where dreams go to die.
  • hoofhearted
    Good if you need a quick resistor or such. Used to have a much better selection of electronics, but now they seem be scaling down their niche.
  • jryan388
    I think if you blacklisted the phrase "Let's facelift bar!" there would be a lot less spam. Whatever that means.