UPDATE 4-RadioShack shares fall on dim sales prospects

* Q2 EPS $0.39 vs. Street view $0.29

* Cost-cutting efforts bear fruit

* Sales of netbooks, digital TVs up

* Sees converter box sales falling in rest of year

* Investors worry whether profits are sustainable (Adds more analyst comments, stock activity)

By Dhanya Skariachan

BANGALORE, July 27 (Reuters) - Cost-cuts helped RadioShack Corp (RSH.N) beat estimates in the second quarter, but its shares fell 8 percent on fears the electronics retailer might not be able to sustain profits by merely controlling expenses.

Stifel Nicolaus analyst David Schick wondered whether the retailer had gone too far with its cost-cutting efforts -- to the extent that they hurt the company's chances of gaining market share in a time when competitors like Circuit City Stores Inc (CCTYQ.PK) have gone away.

In the second quarter, RadioShack managed to reduce selling, general and administrative expenses about 11 percent by mainly keeping a tight lid on advertising costs.

"They will have to spend a bit more on advertising costs over the rest of the year if they want to be able to drive sustainable same-store sales increases," Barclays Capital analyst Michael Lasser told Reuters.

Although cost-cutting should prop RadioShack's earnings for the rest of the year, Wedbush analyst Michael Pachter advised investors to "remain on the sidelines."

The retailer -- which has about 4,450 company-operated stores, almost 1,400 dealer outlets and nearly 600 wireless phone kiosks throughout the United States -- has closed unprofitable stores and cut staff in recent years to turn around its business.

"RadioShack has almost made a habit out of squeezing more costs out of its operation than expected, but this quarter appears to be particularly impressive -- especially since it has generally been thought that the cost-cutting must run out at some point," RBC Capital Markets analyst Scot Ciccarelli said.

Net income at the Fort Worth, Texas-based retail chain rose to $48.8 million or 39 cents a share in the second quarter, from $41.4 million, or 32 cents a share, a year earlier.

Analysts had expected earnings of 29 cents a share, according to Reuters Estimates.

The electronics retailer, which signed a deal with T-Mobile USA Inc last week to expand the scope of its wireless offerings, said sales of netbooks, prepaid wireless handsets and digital televisions improved in the quarter.