Friday, July 07, 2006

What A Change In Management Can Do

July 7, 2006

Radio Shack today announced a new CEO, Julian Day. The stock price immediately jumped $3.00 per share and is UP 22% today alone.

Radio Shack is an exclusive retailer of Sirius Satellite Radio. The company has seen some tougher times recently, and had announced some store closings. Radio Shack, was in an identity crisis, and seemed to be without a concrete direction and focus. The former CEO had resigned after it was learned that he had mis-stated his academic record. Since that time the company has lacked a real focus.

The hiring of a new CEO or a shake-up of management can work wonders for a company as well as its stock.

"A dramatic change in strategy and culture was needed most at Radio Shack, and we think Mr. Day's appointment could spur just that," commented David Schick, an analyst with Stifel Nicolaus.

A bad corporate culture, or mistrust by shareholders in management can be very damaging. The longer that condition is allowed to fester, the more problematic things can become. Something as simple as shaking up the management can often produce immediate and measurable results. What has transpired with Radio Shack today clearly illustrates this.