It looks like the latest round of rumors that Dell Inc. [DELL] is considering buying RadioShack Corp. [RSH] are not only untrue, but probably stirred up by some unhappy shareholders of the 109-year-old consumer electronics retailer.

"I don't see any strategic buyers for RadioShack," said Anthony Chukumba, an analyst with FTN Midwest Securities who predicted a Dell acquisition is "highly unlikely." While Dell has made some uncharacteristic moves over the past year, like signing a deal last May to sell its computers at Wal-Mart Stores Inc. [WMT] and other big-box retailers, Chukumba says the idea of buying any retailer outright, let alone the struggling RadioShack, does not compute.

"They would completely anger their partners," said Chukumba, who added that RadioShack's mostly small, mall-based stores are impractical for displaying an extensive line of PCs. "RadioShack is becoming less and less relevant as a consumer electronics retailer. I think they'll just continue to drift along."

Currently trading around $14.65 per share -- the stock fell from a Friday close of $17.50 following the report Monday of an 8.7% drop in quarterly net income -- RadioShack now sells at less than half its 52-week high of $35. And while efforts to cut costs have helped its bottom line, revenues have been drifting lower for some time -- to $4.25 billion in fiscal 2007, from $4.78 billion in 2006 and $5.08 billion in 2005.

Like Chukumba, most analysts who follow the company characterize it as a relic of another era when convenient location was key to selling consumer electronics and trumped other factors like breadth of product, store size and hassle-free buying without pressure from aggressive salespeople -- not to mention online shopping.

In a research note following the latest quarterly earnings report, Pali Research analyst Stacey Widlitz reiterated her "sell" rating on RadioShack, noting that almost two years after the company installed new management, it has not been able to improve top-line growth.

"With margin improvement and cost cutting largely behind us, we need to see a sales part in the equation," Widlitz wrote.

Another analyst who spoke off the record, described RadioShack as a "mess" of a company with "no redeeming features" and no partner on the horizon that would make a good strategic fit.

RadioShack, in other words, would probably do well to be acquired. Problem is, it's unlikely that anyone is interested.

In the spirit of anything-could-happen, analysts note that no one ever expected Blockbuster Inc. [BBI] to bid for Circuit City Stores Inc. [CC]. Ironically, that deal could have eliminated one of RadioShack's few potential partners.

One source close to Blockbuster said that before the bid for Circuit City was launched, a major Blockbuster shareholder was calling for an acquisition of RadioShack. The rationale was that the two retailers could swap merchandise, giving RadioShack more space to display consumer electronics and let Blockbuster stock its small DVDs in more size-appropriate stores. - Andrea Orr

See April 27 post on Dell-RadioShack rumors from SeekingAlpha.com
See May 2007 post on Dell's Wal-Mart deal from Tech Confidential
See April 14 story on Blockbuster's bid for Circuit City from TheDeal.com