RadioShack quarterly profit rises; shares up

NEW YORK (Reuters) - RadioShack Corp (RSH.N) reported a higher quarterly profit as the electronics chain gained from higher sales of calling plans and recently launched mobile phones like Apple's (AAPL.O) iPhone 4, sending its shares up more than 4 percent.

The company, which has been exploring strategic options including a possible sale, has shifted its focus to sales of wireless phones and related services to offset tepid demand for products like TV converter boxes, videogame systems and batteries.

"Wireless strength should continue through the third quarter and then other categories will have to pick up some slack,"JP Morgan's Christopher Horvers said, underscoring that the wireless segment drove most of the sale rise this quarter.

He said in a note the current consensus forecast of $1.81 for 2010 was reasonable.

On Thursday, RadioShack also said it has entered into a settlement agreement with one of its wireless service providers pertaining to upfront commissions. The service provider has agreed to pay $141 million to RadioShack on or before July 30, according to a regulatory filing.

The Fort Worth, Texas-based chain, which is trying to rebrand itself as "The Shack," said its second-quarter net profit rose to $53 million, or 41 cents a share, from $48.8 million, or 39 cents a share, a year earlier.

Analysts on average were expecting earnings of 41 cents a share, according to Thomson Reuters I/B/E/S.

Net sales rose 4.7 percent to $1.01 billion, while analysts expected $1.02 billion.

RadioShack shares, which have risen nearly 38 percent over the past year mostly on takeover speculation, were up 4.5 percent at $21.10 Thursday morning.

The company, which has a market value of about $2.7 billion, has drawn interest from several buyout firms ranging from Blackstone Group (BX.N) and TPG Capital TPG.UL to Bain Capital to Advent International, but no deal has been reached.

"While there was no news about the pursuit of strategic alternatives, RadioShack did not purchase any shares during the period, a sign that the process has continued," Barclays analyst Michael Lasser said in a note.

Some analysts have however stayed skeptical about its chances of being bought because of weakness in the chain's accessory business.

WIRELESS SEGMENT PROPELS RESULTS

Sales at company-operated stores and kiosks open at least a year rose 6.7 percent, driven by higher postpaid wireless sales, the addition of T-Mobile as a postpaid wireless carrier and higher sales of prepaid wireless handsets and air time.

RadioShack, which recently completed a pilot program of wireless kiosks inside Target (TGT.N) stores, said it planned to roll out kiosks in most of the discounter's locations by mid-2011.c

The related mobile service, named "Bullseye Mobile" after Target's logo, will begin rolling out at select stores by mid-August.

RadioShack, which raised its marketing spending in the quarter to boost sales, has 4,680 company-operated stores in the United States and Mexico, more than 530 wireless phone kiosks in the US and about 1,300 dealer outlets worldwide.

(Reporting by Dhanya Skariachan; Editing by Lisa Von Ahn, Dave Zimmerman)