RadioShack Buys Back Microsoft Stake
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Fort Worth, Texas-based RadioShack Corp., one of the most popular consumer electronics stores in America, Friday bought back the 25 percent minority stake software titan Microsoft corp. bought in it nearly two years ago.
RadioShack paid Microsoft, which originally bought the stake in November 1999, $88 million in cash for the interest and now has complete ownership of itself. The value of the interest is lower than what Microsoft paid for it back then -- 12 million less to be exact. Microsoft paid RadioShack $100 million in cash to make its already ubiquitous presence even more visible through a "store within a store" strategy whereby Microsoft centers would be featured in as many as 7,000 RadioShack locations across the nation. The purpose of the agreement was to accelerate the adoption rate of narrowband and broadband Internet access using Microsoft products and services, such as MSN Internet Access, Microsoft WebTV Network services and Windows CE-based personal digital assistants.
Customers were treated with demonstrations of dial-up or broadband Internet access. To be sure, it seems impossible to get more exposure than RadioShack -- the company crunched some numbers and figured out that 94 percent of all Americans live or work within five minutes of a RadioShack store or dealer.
At the time, when the .NET software-as-a-service initiative was perhaps but a gleam in the software titan's eye, Bill Gates, then serving as chairman and CEO of his company, said: "By forming an alliance with RadioShack, we're reaching customers in a new way, giving them a unique opportunity to experience and obtain online solutions through RadioShack's trained salespeople and expert home-installation team. This model for convenient, one-stop shopping will allow us to greatly accelerate America's conversion to broadband services."
As for RadioShack, the company agreed to the alliance and investment because it wanted to emerge as a strong home networking retailer. While Microsoft's offerings would be highlighted at RadioShack outlets, Microsoft also pledged to help RadioShack beef up its online presence to become a premier provider of electronic goods and services on the Net. Microsoft had done the same for Monster.com and 1800Flowers.com with its e-commerce software.
While Microsoft has in no way abandoned its home connectivity hopes, having demonstrated numerous Net-connected rooms in the past year, it is clear that its emphasis these days is on hawking the heavily-debated Windows XP operating system and the .NET strategy, which seems to raise nearly as many eyebrows as XP.
Although Microsoft no longer has a fiscal interest in RadioShack, both sides claim the companies bear no ill will over Friday's buy-back announcement, claiming that their business relationship is still going strong and that the other facets of the technology, services and marketing alliance remain intact.
"Microsoft and RadioShack continue a shared a vision of helping people integrate technology into their homes," said Henry Chiarelli, senior divisional vice president -- emerging channels for RadioShack. "By demonstrating end-to-end connectivity solutions at the Microsoft Internet Center @ RadioShack and utilizing Microsoft technology to power RadioShack.com, together we can help make the everyday Web a reality."