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Dell Computer to buy RadioShack?

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MK

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#1
RadioShack, Dell in talks?
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By BARRY SHLACHTERStar-Telegram Staff Writer

Some Wall Street traders are betting on an unusual combination: Dell and RadioShack.

On Tuesday, for the second straight day, an unusually high number of options on RadioShack stock -- contracts to buy in the future -- were traded, apparently fueled by unsubstantiated rumors that Dell might be interested in acquiring the Fort Worth-based retail chain.

On Monday, 24,000 contracts were sold. And although Tuesday's number dropped to about 10,000, it remained above the 1,100 calls sold on average in a 30-day period, said Jon Najarian, co-founder of OptionMONSTER, a Web site that tracks the options market from Chicago. Each option is for 100 shares.

Contracts to buy RadioShack stock in May and June fetched $15 and $17.50 on speculation that the shares would be worth $18 to $22 -- "if a takeover transpires," Najarian said.

Stock traders were unfazed by all the options interest Tuesday. RadioShack shares (ticker: RSH) closed down 56 cents, or 3.4 percent, to finish at $16.11, during a down day on the New York Stock Exchange. The stock is trading a few dollars above its 52-week low of $13.31, and far below its $35 high, perhaps suggesting to speculators that RadioShack is ripe for acquisition.

RadioShack spokesman Charles Hodges declined to comment, saying the home-electronics retailer does not address rumors or speculation.

And the idea of a Dell takeover of RadioShack -- first suggested in a BusinessWeek column a year ago -- had some analysts scratching their heads.

"Personally, I just don't see it," said Mike McCoy, an analyst for Columbus, Ohio-based Retail Forward, who follows the consumer-electronics industry. "The only [thing] Dell would get is locations, and somehow they would have to acquire the retail expertise."

RadioShack has been fighting a steady decline in sales in recent years as shoppers have gravitated to Best Buy, Wal-Mart and other competitors for electronics products. Under Julian Day's leadership, the company has boosted its profits through aggressive cost-cutting even as sales have fallen. But some analysts have questioned whether the new executive team has a merchandising plan that will reverse the sales slide.

Dell has faced its own problems. Losing market share to rivals such as Hewlett-Packard, the Austin-based computer maker decided to stray from its direct-sales model. It found good tie-ups with Best Buy and Wal-Mart in the United States, and chains like the Hypermart retailer Carrefour in Europe, McCoy said. "RadioShack has really struggled these last several years to find a niche -- searching for something to get shoppers into the stores," he said. "Today, there's really no compelling reason for them to go there when you have stores like Best Buy and Circuit City."

He said Dell's mall kiosks don't give the company much retail savvy, but its products are being sold by people who have that expertise in Best Buy.

Najarian said it's too early to determine if the rather dramatic options trading signals any indication of Dell-RadioShack negotiations. "I believe it's just pure speculation," he said. "I would [like] to see a couple more days [of heavy trading] to reinforce the idea that something is going on."

Options traders typically watch for any development toward the end of the week, such as board members of the respective companies suddenly sequestered for a meeting, Najarian said. And it's not unusual for hedge funds to dispatch people to watch for such activity, he said.
 
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#2
I guess it buys them ready made outlets for their product... Best Buy only seems to carry the very lowest end of Dell so maybe this way they can get higher end stuff onto the shelves, why not makes sense I guess.
 

Zaratsu

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#3
RS must be selling CHEEP. I doubt that Dell wants all of the RS outlets, but it could take the majority of them. Kiss all the quirky RS stuff and crummy antanaes, tvs, and stereos goodbye. The stuff that we are interested in at RS is a very minor part of their sales and with rising fuel prices end up costing them money to sell some items. I do have a feeling that RS will be missed as they have be taken for granted despite their decline. They are no longer the wonderous hobby and gear store they were 20-30 years ago, but it is the only place in town you can find things that dont make sense for bigbox to carry. All these items are easily found on the internet anyways. Doesnt make me happy as I prefer to buy retail and still enjoy browsing a RS even though they are far behind the times on technology and pricing.
 

iMONITOR

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Dell seems to be grabbing at straws lately. They just hooked up with Best Buy recently...now Radio Shack? I think Dell is going to Hell.
 
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#7
DanTSX said:
The stuff that we are interested in at RS is a very minor part of their sales and with rising fuel prices end up costing them money to sell some items. I do have a feeling that RS will be missed as they have be taken for granted despite their decline. They are no longer the wonderous hobby and gear store they were 20-30 years ago, but it is the only place in town you can find things that dont make sense for bigbox to carry.
Especially here in the sticks... this'd be the end of getting parts, that's for sure. Only game in town.

Dell probably wants in on the drug dealer and kid cellphone business.

Rich
 
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