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Changes ahead for the Sharper Image?

The Sharper Image is a mess, says Don Reisinger, who explores what he sees as the company's issues, in the wake of its chairman stepping down to consider a buyout.

The Sharper Image may have been the favorite of geeks in the '90s, but it's now a shadow of its former self.

After being delisted from Nasdaq, filing for bankruptcy, and announcing that it will close 96 of its 184 stores, the end is near for the specialty electronics retailer.

Or is it?

In an interesting development, The Sharper Image announced on Thursday that its chairman, Jerry W. Levin, is stepping down to pursue the possibility of acquiring the company's stock and assets.

Neither Levin nor The Sharper Image were ready to speculate about what his plans are, but it begs a question: "What is going on at The Sharper Image?" It's a company that has flown under the radar for quite some time, and most have written it off as a relic of the past, but I think there's more to it than that. If nothing else, the soap opera over at The Sharper Image is extremely interesting to watch.

Let's take a trip down memory lane. Back in 1977, when The Sharper Image opened shop, the company was designed with the offbeat electronics lover in mind. Since its move to Nasdaq in 1987, it lost its way in many respects and tried to be the "cool" guy's gadget house. It abandoned its tried-and-true marketing efforts in favor of infomercials. You know--the ones with that crazy-looking guy who yells a lot.

Since then, it was all downhill for The Sharper Image. And after the Internet became the safe haven for many of those gadgets at a much lower price, The Sharper Image did what it could by putting its stores in malls and other areas that it thought it could capitalize on impulse buyers, but it failed miserably.

Since then, its management failed miserably at trying to turn the company around. In an attempt to do so, it shook up the management and board.

But what the company obviously failed to realize is that people don't want what The Sharper Image offers in that kind of environment. Let's be honest--who really wants to buy the Ionic Breeze on The Sharper Image's site for $400 when they can have the same exact product on Amazon for $350?

And although that's just one example of the issues at The Sharper Image, they go far beyond the Ionic Breeze. More than anything, the company is in a tight spot. It was delisted from Nasdaq due to an incredibly low stock price (it's valued at $0.23 per share), and its 2006 loss of almost $60 million is making it increasingly more difficult for the company to compete with major online retailers.

So what can be done? Certainly, Jerry W. Levin thinks he knows, but I'd like to see what he comes up with. If nothing else, the company should close the rest of its brick-and-mortar stores, and try to live out the rest of its days online. If it doesn't, it'll probably meet its demise much sooner than originally planned.