The NYSE notified Radioshack (RSH -Analyst Report) that it is out of compliance with its listing requirements because its stock has been traded below $1 for 30 straight days.  This will lead to a possible delisting in the coming year, so investors should keep a watch out for any news.  On a lighter note, after about three weeks, the activist hedge fund Standard General will officially replace a $595 million debt facility originally provided by GE capital that will allow the electronics company to tap more funds.

The stock is currently trading at 99 cents per share, and up about 1.59% for the day. The stock has currently lost 62% of its value this year over concern of lack of liquidity and potential for bankruptcy.

Standard General holds about a 9.8% stake in RadioShack and has less restrictive terms than GE that will allow RadioShack more mobility in obtaining funds in preparation for this upcoming holiday season.  The new funding source will allow Radio Shack’s liquidity to increase by at least $120 million.

Current State

RadioShack is down to their last $30.5 million in cash and are trying to utilize any strategy that will make the company stay afloat.  Radio Shack tried to close 1,100 stores this year, but lenders did not agree with the plans and ended up only closing 200 stores this year. 

Hopefully the liquidity injection will help turn the company around. After all, the funds they will be receiving of $ 595 million is about 6 times their current market capitalization and about 14% of their trailing twelve month revenue. 

The net income has significantly decreased by 158.8% when compared to the same quarter one year ago, falling from -$53.10 million to -$137.40 million. Net operating cash flow has significantly decreased to -$87.20 million or -289.15% when compared to the same quarter last year.

The company said last month that it has liquidity of $182.5 million, including $30.5 million in cash.

Grinding it out

RadioShack has been under the microscope by Wall Street and investors on how they will turn around their failed business plan.  Now that the holiday season is coming around the corner, more pressure has been added on the electronics store to implement a strategy to satisfy investors this holiday season.

Some investors think this is not possible due to the lack of overall market adaptation capability by Radio Shack when compared to the e-commerce giants eBay (EBAY), Amazon (AMZN) and now maybe even Alibaba (BABA) in the future. 

Possible Solution

One possible solution for the lackluster electronics company would be to completely rebrand or to become a pure online only venue and in so doing drastically lower their overhead.

The business model these days for shopping is being transformed from in store transactions to huge online showrooms.  E-commerce is going to be a huge sector within retail in the next decade that could possibly completely overtake in store transactions.  To make a truly engaging in-store experience that would draw people in requires an investment that is difficult to sell enough merchandise to support without the buying power of a Wal-Mart. 

Bottom Line

RadioShack has a steep hill that is only getting steeper as the holidays approach.  They have begun their strategy with partnering with Standard General that will allow them to access more funds.  This in turn will allow them to attempt a better strategy to attract customers and generate revenue. 

With the possibility of the NYSE giving a delisting notification, RadioShack is in the home stretch to the white light of businesses and investors will have to wait and see if the electronics company has any more batteries left.