RadioShack Corp. (NYSE: RSH) has been run by turnaround operator Julian Day for about three years now. He got the stock turned around, but then came issues in the retail sector and then came the recession. So now the company has a new turnaround strategy that is not a CEO change nor a normal management change. RadioShack is going to be the main sponsor for Lance Armstrong’s new cycling team in 2010.
The Web site domain teamradioshack.com was just registered this week by CSE Cycling, LLC. CSE is part of Capital Sports & Entertainment based in Austin, Texas, and is Armstrong’s management firm. We have not seen terms of the deal formally yet, but the figure being thrown around is $10 million per year in a three-year deal. What is not clear is if the payment for the deal is dependent upon Armstrong being in the Tour de France and other events in 2010 and beyond. Those terms may or may not come out.
Armstrong will also compete for Team RadioShack as runner and triathlete, and will ride in the Tour de France in 2010. And no, it is not likely that RadioShack will start repairing bicycles. Here is a personal prediction: All those US Postal Service bike jerseys I see when I go riding are probably about to lose yet another notch on the “coolness” scale.
But if the $10 million figure is correct, then RadioShack may have just scored a coup. Its market cap is $1.8 billion. It has also posted sales in excess of $4 billion for at least the last three years and is expected to stay above the $4 billion sales level for 2009 and 2010.
RadioShack is up less than 1% today at $14.66, and the 52-week range is $6.47 to $19.90.
JON C. OGG