RadioShack Corp reported higher-than-expected revenue in the third quarter, and the electronics retailer's shares rose 4.7 percent in premarket trading.

Although earnings fell and narrowly missed analysts' average forecast, net sales totaled $990 million, well ahead of Wall Street expectations of $961.7 million.

Our financial performance improved in the latter part of the quarter, primarily driven by our strong mobility business combined with an economy showing some signs of potential stabilization, Chief Financial Officer Jim Gooch said in a statement.

The retailer, which recently signed a deal with T-Mobile USA Inc, is now focusing more on wireless offerings and popular products such as iPods and iPod accessories as consumers curb spending in the recession.

The move to strengthen its wireless business is also an attempt to combat fierce competition from national big-box retailers like Best Buy Co Inc , discounters like Wal-Mart Stores Inc , wireless carriers and other new wireless distribution channels.

Earlier this month, Wal-Mart said it will sell discounted mobile services nationwide, threatening to aggravate a price war and hurt profit margins across the U.S. wireless sector.

RadioShack said third-quarter net income fell to $37.4 million, or 30 cents a share, from $49.1 million, or 38 cents a share, a year earlier. Analysts on average were expecting 31 cents a share, according to Thomson Reuters I/B/E/S.

Sales fell 3.1 percent from the year-earlier $1.02 billion.

Sales at RadioShack stores and kiosks open at least a year fell 2.9 percent in the latest quarter.

While sales of converter boxes, laptops and wireless accessories fell, demand for Sprint Nextel postpaid wireless offerings, prepaid wireless handsets and netbooks was steady.

RadioShack had seen an uptick in sales of its converter boxes in the past year due to a mandatory switch of all U.S. televisions to digital in June.

RadioShack's gross margin improved by about 0.9 percentage point to 47.6 percent as the retailer included more higher-margin products, such as postpaid and prepaid wireless, in its merchandise mix and moved away from lower-margin products like converter boxes, laptops and GPS.

Its shares were up 4.7 percent at $16.40 in premarket trading.

(Reporting by Dhanya Skariachan; Editing by Derek Caney and John Wallace)

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