RadioShack bankruptcy leaves Sebastopol dealer in limbo

Can RadioShack transform itself one more time?

Independent dealer Andy Cohen in Sebastopol is among those waiting to see whether the once-iconic brand can fight back from bankruptcy and keep working with him and the other owners of roughly 900 franchise stores, including some that have served small-town America for nearly four decades.

Among tech retailers, RadioShack has been the proverbial cat with nine lives, outlasting a string of competitors over the generations as it transformed itself from a business for ham radio hobbyists into a national computer and electronics retailer.

For certain baby boomers, the company can still evoke nostalgia for its long-gone mail-order catalogs, its former free battery of the month club, its ground-breaking personal computer and the multitude of gadgets it once carried.

But the rise of online retailing and stiff competition for cellphone sales have raised questions about how much life remains in the 94-year-old RadioShack. The worry was summed up in the theme of the company’s funny but self-deprecating 2014 Super Bowl ad: “The 80s called. They want their store back.”

In the wake of RadioShack’s Feb. 5 bankruptcy filing, Cohen and more than 100 independent U.S. dealers have banded together to make sure their views are represented in the court proceedings.

Not wanting to simply sit on the sidelines, the dealers find themselves both voicing hope that RadioShack can survive its latest crisis while at the same time insisting that their own stores will continue even if the company shuts down.

“We’ll probably be fine,” said Cohen, who noted that his Gravenstein Highway North store now makes most of its money in 3-D printing, a separate income stream from the products that RadioShack provides. He and other franchise owners said customers will continue to look to them for specialized products and services, regardless of the brand on their business signs.

The dealers are looking ahead to March 23, when a bankruptcy court will oversee an auction to determine who will buy the chain’s assets and name. The hedge fund Standard General, a major lender and stockholder, has won the role of opening bidder. It has said it would acquire up to 2,400 of the stores and would operate up to 1,750 of those outlets with wireless carrier Sprint by using a store-within-a-store model. And it has offered $20 million for rights to the RadioShack name.

Richard Mikels, the Boston attorney representing the dealers, said his clients have two key questions. The first question is who are the actual buyers behind the Standard General deal?

“The second question,” Mikels said, “is do they want to do business with the dealers?”

The outcome of the auction should make clear the fate of RadioShack’s 4,000 stores and 27,000 workers.

The company already has closed its Santa Rosa Plaza outlet, but its seven other corporate stores in Sonoma County remain open, as is Cohen’s store in Sebastopol.

However, the deadline to use RadioShack gift cards ended Friday, according to a leader of the dealers’ ad hoc committee. Some early estimates put the value of the outstanding gift cards at $44 million.

In its bankruptcy filings, RadioShack listed assets of $1.2 billion and debts of nearly $1.4 billion.

Internet search engines overflow with stories about how RadioShack flourished after its 1963 acquisition by Tandy Corporation, as well as how the company eventually lost its way amid a revolving door of corporate executives.

In the years before personal computers, both the dealers and the company representatives “understood each other because you were both kind of geeky,” recalled Deb Noffke, who counts herself “second-generation RadioShack.” She runs her family’s Shawano, Wisc., store, which became a company dealer in 1976.

In those pre-PC days, the hobbyists who came to her family’s store included adolescent boys who wanted to know how to build their own electronic devices. About five of those young men went on to tech careers, eventually moving to the West Coast, she said.

Similarly, Bloomberg News recounted that before Steve Jobs and Steve Wozniak started Apple, they bought diodes and transistors from RadioShack to build a device “that tricked the phone system into letting them make free long-distance phone calls.”

After Fort Worth, Texas-based Tandy acquired RadioShack, the company caught the citizens band radio craze. In 1972 it sold its first all-electronic calculator and in 1977 was among the first companies to offer a personal computer, the TRS-80, with its operating system created by Microsoft’s Bill Gates. RadioShack followed up with its “Model 100” laptop in 1983, its first mobile phone in 1984 and its first satellite television systems in 1985.

But though the company created big opportunities by reinventing itself into a general electronics store, it eventually found it would have to morph again, said Michael Pachter, an analyst with Wedbush Securities in Los Angeles. Dell and other computer makers took away the personal computer market, he said, so RadioShack turned into an electronics convenience store.

For a time, cellphone sales provided revenue to keep the company afloat. But the wireless carriers now are pushing such sales into their own stores, and RadioShack has yet to find new opportunities.

“They ran out of ways to reinvent themselves,” said Pachter. He deemed it “not likely” that the company will have the wherewithal going forward to stock all the products that the independent dealers have relied on for decades.

In Sebastopol, Cohen bought his store in 2003, a year after his layoff from Agilent Technologies. With a doctorate in information systems, he had worked in engineering roles at Hughes Aircraft, McDonnell Douglas, General Dynamics and Hewlett-Packard.

At the time, he said, the store’s purchase seemed a great choice and within three years the business had returned his original investment. But soon thereafter some of RadioShack’s shine “started to tarnish.”

In early 2006, the company reported that its quarterly earnings had dropped 62 percent and it was looking to close hundreds of its underperforming corporate stores.

Cohen, meanwhile, found a niche in the emerging world of 3-D printers. His store features a few of his creations, including a full-size electric guitar and a small replica of the statue, the Winged Victory of Samothrace, which is housed in the Louvre.

“We’re the only brick-and-mortar source for 3-D printing in the North Bay,” he said. He showed off one of 100 custom-made award plaques he recently had manufactured for a Salt Lake City group that runs a model car competition.

Cohen also has watched a modern group of hobbyists - the Maker Movement enthusiasts - seeking the electronic controller boards and knowledge needed to make all sorts of creative electronic devices.

Arduino boards and other “open source” controllers allow enthusiasts to build robotics and coordinate over-the-top holiday home light and music displays. Interest in such gadgetry gets especially strong “a few weeks before Burning Man,” said Cohen, referring to the annual week-long art festival in the Nevada desert.

Regardless of the future of RadioShack, he said, his store is going to cater to such clients with a message of empowerment: “You buy stuff that puts you in control of the world around you.”

To some, RadioShack seems forever linked to an earlier time, passed up by all the changes the world has seen in technology. One history buff uncovered a company ad from 1991 and noted that 13 of the 15 items on sale - including video recorder, phone answering machine, portable CD player - all can be replaced today by a single device, the smartphone.

Similarly, Pachter suggested the company’s name doesn’t seem particularly relevant to younger consumers. “My kids don’t even know what a radio is,” he said, “let alone a shack.”

Representatives of the dealers, however, hold out hope.

RadioShack’s reputation has been damaged but “we believe there’s still a great amount of value in that brand and it can come back,” said Ira Brezinsky, the chairman of the dealers’ ad hoc committee.

Despite the rise of online commerce, there remains a need for brick-and-mortar stores, especially for people who need technical answers and advice as well as a place to purchase electronic items, said Brezinsky, who runs RadioShack stores in Greenfield, Mass., and Brattleboro, Vt.

Most dealers, he said, believe they will survive with or without the corporation. Regardless, they intend to keep operating full-service electronics stores “in what are largely the small towns around America.”

Noffke, the Wisconsin store dealer, is rooting that RadioShack will continue to supply her store, saying she values the company’s packaging and quality control.

But even if the company goes away, she still intends to stay open, selling parts and giving answers to shoppers who know what they want to do but need help with “the technical knowledge to put it together.” And she has no plans to stop soldering parts at the counter.

“We’re old school. We’re different,” Noffke said. “And that’s probably why we’re still very much alive and kicking.”

You can reach Staff Writer Robert Digitale at 521-5285 or robert.digitale@pressdemocrat.com. On Twitter @rdigit