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RadioShack shares drop at steepest rate since 2002

RadioShack shares plunged the most in almost six years today after the Fort Worth-based retailer said first-quarter profit fell 9.5 percent on slowing wireless-plan sales.

RadioShack declined $2.39 a share, or 14 percent, to $15.10 in morning trading on the New York Stock Exchange, the steepest drop since August 2002. The shares more than doubled in the year after Julian Day took over as chief executive in July 2006. But after peaking last June, the stock dropped 50 percent through last week.

Net income fell for the first quarter and sales dropped for the seventh straight quarter as Day failed to stem declining income from wireless phones and plans, which account for about a third of revenue. Higher advertising costs also cut into profit. Selling, general and administrative costs were $31 million less, compared with a $40 million decline in the fourth quarter.

"We’re definitely seeing evidence the cuts are fading and now it’s a revenue story," said Scott Tilghman, an analyst with Soleil Securities Corp. in Baltimore. "We’re not seeing profitable top-line growth."

Profit dropped to $38.8 million, or 30 cents a share, from $42.5 million, or 31 cents, a year earlier, the company said. Sales declined 4.4 percent to $949 million.

Profit included a gain of about 3 cents a share related to an income-tax issue in Puerto Rico, said Tilghman. Excluding that, profit was 27 cents, he said.

Analysts had estimated earnings of 29 cents a share, according to a survey by Bloomberg. The sales estimate was $945.2 million.

Revenue from less-profitable items, such as global-positioning devices, video game consoles and digital cameras, advanced.

Sales in stores open at least 12 months fell 4 percent, less than some analysts estimated. Rick Weinhart, an analyst with BMO Capital Markets Corp., predicted an 8 percent drop in a research note April 22.