It sounds good on the surface considering how bad things have been. The problem is that gross profit as a percent of net sales in the quarter is expected to be about 35%. That margin was about 41% a year earlier and that implies far worse earnings. The new earnings guidance is $0.11 to $0.13 per share. A year earlier was $0.51 per share and Thomson Reuters was calling for $0.35 EPS.
The company blamed “a shift in mix within mobility sales towards certain lower margin smartphones and mobile devices; a higher percentage of mobility sales in the overall revenue mix, largely driven by the Company’s expansion of Target mobile centers; and the impact of a more promotional holiday season.” That is a lot of moving parts and too many for investors.
Another blame was “in large part to the underperformance of the Sprint postpaid wireless business and reflect further unanticipated changes in Sprint’s customer and credit models. These changes resulted in fewer new and upgrade activations and a decline in Sprint postpaid revenues in the fourth quarter compared to the 2010 fourth quarter and compared to third quarter 2011. In addition, fourth-quarter results reflect a highly promotional holiday season and ongoing pressures on consumer spending.”
Sprint Nextel Corporation is down as well on the news by 1.4% in the after-hours. That is nothing compared to RadioShack Corporation (NYSE: RSH) with a drop of over 17% to $8.43.
The prior 52-week low was only $9.15.
JON C. OGG
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