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January 15, 2013

RadioShack and Target Cut Ties

By Ashley Caputo, TMCnet Web Editor

As consumers fight for the latest iPhone5 and Galaxy, it seems that there is a high demand for the newest devices and accessories on the market. So it would make sense that when a retailer can’t provide these products, its profits will decrease steadily, just like RadioShack’s did.

RadioShack just announced that it will end the partnership it had with Target (News - Alert) since 2010. Since October 2012, Target and RadioShack have been renegotiating the terms and relationships but were unable to come to an agreement that was financially attractive for both sides.

This partnership allowed RadioShack to manage Target's postpaid mobility business.  According to the RadioShack Corporation, RadioShack wasn’t managing the prepaid mobile phones or accessories in Target stores that were the most lucrative. Instead of this partnership aiding the growth of both companies, RadioShack took a large hit with its Target investment.

The postpaid mobile business that RadioShack had access to didn’t offer any of the latest smartphones or phone accessories that would have been profitable for the company. Instead, Target only offered these devices with prepaid plans which most consumers preferred over purchasing a mobile phone with a contract.

According to Zacks Research, in the third quarter of 2012, RadioShack suffered a $47.1 million net loss due to its agreement with Target. The termination of their partnership might be the best choice for RadioShack, as it has seen instant results with its shares increasing 5.19 percent to $2.43 in post-marketing trading.

As for the future, Target plans on continuing its expansion into Asia with a franchise deal with Bejyay, a Malaysian Conglomerate.

Want to learn more about the latest in communications and technology? Then be sure to attend ITEXPO Miami 2013, Jan 29- Feb. 1 in Miami, Florida.  Stay in touch with everything happening at ITEXPO (News - Alert). Follow us on Twitter.

Edited by Rich Steeves
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