Rental giant Blockbuster has once again adjusted its expected earnings from the 2009 fiscal year, and the direction isn’t up. After a dismal fourth quarter, Blockbuster is now anticipating a net loss of $183 to $193 million, casting further doubt in the minds of analysts and the renting public that the beleaguered company can stay afloat.
Eric Wold, an analyst with Merriman Curhan Ford, was surprised by the magnitude of the company’s latest downward revision, and feels that the increasing losses indicate that Blockbuster’s latest efforts to make its stores and stock selection more enticing to consumers have failed. Said Wold:
“It seems as though [these efforts] didn’t matter to consumers if (in our opinion) they are going elsewhere to rent movies anyway,”
Wold, who frequently covers Redbox and Netflix, echoes the commonly held perception that the home video rental market is marching inexorably towards kiosk, by-mail and online channels. According to Home Media Magazine, Wold thinks that the upcoming combined closures of nearly 2,000 Blockbuster, Movie Gallery and Hollywood Video stores “could put $500 million to $600 million of annual rental revenues up for grabs, including $375 million to $450 million to the kiosk and by-mail rental channels”.
Michael Pachter, an analyst with Wedbush Morgan Securities, feels that bankruptcy may now be a very real concern for Blockbuster. Said Pachter:
“Given today’s news, we must question how long the company can continue as a going concern given its rapidly deteriorating performance,”
In other movie rental news, Redbox parent Coinstar’s fourth quarter results are due in just a few weeks on February 11. Both Hollywood and Coinstar investors are anxiously awaiting the results, which will indicate whether Redbox’s ongoing feud with half of Hollywood and its expensive workaround operation are affecting its bottom line. Said Wold:
“Should Coinstar report fourth quarter pre-tax earning margins from 16% to 17%, this would prove that Redbox can be financially successful even if [it] loses the lawsuits and the current temporary workarounds become permanent,”
Is Blockbuster’s head now directly under the guillotine, Insiders? Should we start a BB death clock on this site? Let us know what you think in the comments.
[via Home Media Magazine]