Oct. 27--RadioShack's third-quarter profits were down 24 percent from the same period in 2008, but better-than-expected sales and an encouraging outlook helped drive up its share price 16 percent.

The Fort Worth-based retailer earned $37.4 million, or 30 cents a share, down from $49.1 million, or 38 cents per share a year earlier. Revenues were $990 million.

According to a survey of financial analysts by Thomson Reuters, Wall Street's consensus expectation was for 31 cents a share in profit on $962 million in revenue. Sales at stores open at least a year were down less than 1 percent, also outperforming analysts' estimates.

Analysts had said this year that while the company was benefitting from the sale of high-definition television digital converter boxes, job cuts and other cost savings, those benefits would fade and challenge RadioShack to build on its momentum.

Investors focused on the better-than-expected sales, and the company's shares (ticker: RSH) rose $2.49 a share, to $18.15. More than 17.3 million shares traded hands, unusually heavy volume that represented more than 10 percent of RadioShack's outstanding common stock.

"Spending you can always cut, but sales you can't just make happen," Michael Pachter, a Los Angeles-based analyst at Wedbush Morgan Securities, said of the revenue report.

In a statement, Chairman Julian Day said, "Two key strategic efforts continue to be primary areas of focus for the organization." The first, he said, was "the launch of the 'THE SHACK' brand platform," which he termed "a success, and we will continue to refine and invest in this positioning."

In August, RadioShack launched a rebranding effort aimed at updating consumers' perceptions. It also announced that it will sponsor Texas cyclist Lance Armstrong's professional riding team.

Second, Day said, "the introduction of T-Mobile in our company-operated stores and Verizon Wireless in our Sam's Club Kiosks" boosted RadioShack's mobile communications offerings. "Together with AT&T and Sprint, we now offer a broader range of choices to fit consumers' needs," he said.

Jim Gooch, executive vice president and chief financial officer, noted improved performance in the latter part of the quarter propelled by "strong" mobile sales. Gooch also said that the economy showed some signs of stabilizing.

Third-quarter sales and operating revenues dropped $31.9 million to $990 million, down from $1.02 billion for the same period in 2008. Comparable same-store sales at company-operated stores and kiosks for the first nine months of 2009 fell 0.7 percent from 2008 because of declines in wireless accessory, GPS product, digital music player and camera sales.

The company said the decline was somewhat offset by revenue from Sprint Nextel wireless business and sales of netbook computers, prepaid wireless handsets and airtime.

RadioShack continued to stockpile cash, reporting $856 million as of Sept. 30 compared with $824 million a year earlier.

"With sales improvements in the core business and the] addition of T-Mobile, we continue to believe RSH has a very favorable risk/reward profile," RBC Capital Markets analyst Scot Ciccarelli said in a note to clients.

This report includes material from the Dow Jones Newswires and Bloomberg News.

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