Goldman Sachs Comments On Radioshack After iPad 2 Announcement

Radioshack RSH confirmed that it will carry the iPad2 in 500 stores, beginning on March 29. Goldman Sachs expected a rollout to additional stores, based on RSH's performance selling the product. RSH introduced the iPhone with a similarly staged rollout. Goldman Sachs has always expected a gradual flow of tablets over the course of the year, but the iPad2, relatively early in its release cycle, should bode well for RSH. The margin profile of the iPad2 is likely close to that of a notebook PC, i.e., below RSH averages, even with an accessory bundle, but nonetheless probably accretive to earnings. Relative to BBY, for instance, RSH does a relative limited business in notebooks and netbooks and, given its smaller box and mobile focus, is better positioned to sell tablets than larger computing devices. Goldman's estimates are under review pending additional research on the pace of the iPad rollout. Goldman's PT, based on risk/reward, DCF, and an M&A component, remains $18. Key risks include sluggish non-wireless sales and the pace of the resolution of the firm's dispute with T-Mobile. Goldman Sachs has a Buy rating on RSH RSH closed Monday at $15.01