Is RadioShack preparing to disconnect?

After years of failing to get back on consumers' dials, RadioShack (RSH) is said to be preparing for a bankruptcy filing as early as next month.

The 94-year-old electronics retailer could file for bankruptcy protection as early as the first week in February, The Wall Street Journal reported. RadioShack declined to comment, but added, "RadioShack has not confirmed any of the information that is being reported."

The specter of bankruptcy, while not entirely a surprise given the retailer's recent struggles, sent shares of RadioShack plunging by one-third. The retailer had been struggling in recent years, and last fall warned in a regulatory filing that it was running out of money, raising "substantial doubt" about its ability to continue as a viable business and the possibility of Chapter 11 bankruptcy protection.

With Thursday's slide in its stock price, the company's market value shriveled to less than $29 million, or about one-hundredth of its $3 billion market capitalization in 2007.

The company has struggled with ballooning debt and declining sales, unable to convince consumers to return to its stores. As of November, RadioShack was carrying $841.4 million in long-term debt, an increase of about 37 percent from the previous year. In December, during the crucial holiday shopping season, it came to loggerheads with some lenders who accused it of defaulting on a loan.

What would happen to RadioShack after a bankruptcy filing is unclear. The company is in discussions with a private-equity firm that could buy its assets out of bankruptcy, or it could aim for a more typical restructuring of its operations and debt reduction, The Journal noted.

Last year, its fight with creditors blocked RadioShack's plans to close up to 1,100 stores in an attempt to cut costs. On top of that, the weeks heading into the holiday season failed to deliver cheer, with third-quarter sales declining 16 percent and missing some analysts' estimates. Thanksgiving weekend same-store sales slipped 1 percent, never a good sign for the crucial kickoff to the holiday shopping season.

"With liquidity quickly drying up and certain lenders refusing to cooperate with management's restructuring plans, we believe the holiday selling season could represent the company's 'last stand,'" BB&T Capital Markets analysts Anthony Chukumba and Daniel Cannata wrote in a research note last month.

Of course, RadioShack's struggles have grown out of seeds planted years ago, as it lost cachet and market share to newer electronics retailers such as Best Buy. And despite having one of the most popular early computers, the TRS-80, it failed to leverage that computer business into new products and was overtaken by Dell and IBM, among others.

In recent years, RadioShack had sought to lure younger consumers through its doors with in-demand products such as Dr. Dre Beats headphones, and remodeled some stores to make them more appealing. It also enlisted musicians such as Weird Al Yankovic in its ads and created offbeat videos about how to survive the zombie apocalypse.

Yet given the competition from online retailers such as Amazon and newer brick and mortar competitors, those efforts proved too late to make much of an impact. Chief executive Joseph Magnacca, who was hired two years ago from Walgreens to turn around RadioShack's fortunes, "inherited a sinking ship," Wedbush analyst Michael Pachter wrote in December research note.

He added, "Mr. Magnacca is the figurative new captain of the Titanic who arrived after the ship hit the iceberg."