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RadioShack sinks to all time low

July 25, 2012: 12:25 PM ET

Click the chart to track shares of RadioShack.

Investors have plenty of questions about the future of RadioShack following a dismal earnings report, but the electronics retail is still claiming to have the answers.

As it delivered a surprise $21 million loss for the second quarter, RadioShack (RSH) said it would also suspend its dividend program to help bolster its balance sheet. A balance sheet that's saddled with $679 million of debt, including an upcoming debt maturity of $375 million coming due in August 2013.

"Overall, our business performed below expectations during the second quarter," said CEO Kim Gooch.  Suspending the dividend program "will allow us to increase the amount of excess cash available to pay down the debt, continue to invest in improving the business, and ensure that we maintain our strong balance sheet."

Shareholders aren't convinced. The company's stock sank almost 30% to an all-time low of $2.63 per share.

RadioShack has been facing increased competition from online retailers like Amazon.com (AMZN) and bigger electronic retailers like Best Buy (BBY). And as the company shifts its focus toward wireless products to benefit from the growing smartphone market, it is also going up against carriers that sell phones directly to consumers such as AT&T (T) and Verizon (VZ).

While RadioShack said it was "pleased with the sales growth generated in the mobility category," it didn't do much to help the bottom line as consumer demand increased for lower-margin smartphones, including Apple's (AAPL) iPhone.

Even ahead of the earnings release, RadioShack was the most shorted stock in North America, according to Data Explorers, a New York-based research firm that tracks short sales. In fact, RadioShack now has 35% of its shares out on loan, seven times the amount seen last year, according to the firm.

Shares of the retailer are down more than 70% so far in 2012.

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