Any Comeback For RadioShack?

With RadioShack (RSH) now trading at just $7.25, close to a 52-week low, the impulse may be to buy a few shares and see if something good might happen.

Avoid that temptation.

As Vince Martin reported here on Wednesday RadioShack's woes are not cyclical but secular. The old parts business is fading, and they can't find a way to make it in mobile.

As technology matures margins naturally decline. The parts business - batteries and cables and little things you don't know you want until you need them - hid this problem. Parts can have fat margins.

But the device business, as opposed to the PC business, doesn't leave a big parts business. More to the point, given the low price of a tablet or phone ($2-500), manufacturers and service providers have been squeezing out the middle man for years.

If you want an iPad, you can buy it directly from Apple. If you want a mobile phone, you can buy it directly from the network. And it's no longer any big deal that the guys at the phone company store know almost nothing about the workings of what they're selling. If it doesn't work you replace it, you don't fix it. The data can be synced from the cloud.

This is not about to change. RadioShack has tried going into more-expensive devices - flat-screen TVs and their parts - but it hasn't made up for the losses elsewhere, or even close. It has no experience with the kind of service contracts companies like Best Buy (BBY) (with its Geek Squad) have found profit with. Installation, even for high-end TVs, is becoming a do-it-yourself proposition.

If I were king I'd be going up the stack, becoming a sort of W.W. Grainger (GWW) for computer networks, parts, and service. I'd be hiring people who know how to fix things and make networks efficient, and aim them at the millions of small businesses out there who are too big for a single PC but too small to be worthwhile to an IBM or EDS. And I'd be helping these small businesses work on their own cloud strategies, perhaps merging with a company that is in that business.

But I'm not king. And an investor who bets on their own pet strategy coming to pass soon loses their money. So take a pass on RadioShack, unless and until it offers a strategy with some hope of real success.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.