This Thursday will be a huge day for both friends and foes of Redbox. The kiosk operator’s parent company, Coinstar, will be releasing its eagerly awaited fourth quarter results, and proponents and opponents are sure to be watching closely. Redbox spent the final three months of 2009 dealing with myriad challenges, and the financial results are expected to paint a picture of how well or poorly the company is dealing with said obstacles.
Several industry analysts have expressed cautions optimism regarding Redbox’s upcoming financial results. Merriman Curhan Ford analyst Eric Wold, who tends to make Redbox prognostications through rose-colored glasses, had the following to say about the pending results:
“Should Redbox surpass revenue expectations and guidance of $218 million to $238 million (after posting somewhat disappointing revenues in 3Q), we believe this would address any revenue concerns,”
Regarding the embargo by three studios forcing Redbox to buy titles at retail, Wold said the following:
“If [pre-tax earnings] margins come in the range of 15% to 17% (which has been the pre-tax range over the previous four quarters when only one studio workaround was in place), we believe this would help address any [pre-tax earnings] concerns,”
D.A. Davidson & Co. analyst John Kraft anticipates $225.5 million in rental revenue for Redbox, as well as an increase in the size of the force the company has out on new release street dates making purchases at retail stores. Said Kraft:
“We have seen … a significant increase in job postings on the company’s Web site,”
Wedbush Morgan Securities analyst Michael Pachter has revised his quarterly revenue estimate down to $317 million from $333 million and has doubts about Redbox’s workaround program, especially with the recent restrictions put in place by several retailers. Said Pachter:
“We expect the new limit of five new-release DVDs per customer imposed by Wal-Mart and Target could drive up inventory costs further,”
Pachter feels that while Redbox will notice some benefit from the mass closures of Blockbuster and Movie Gallery locations, the kiosk operator likely needs to increase its prices to offset higher inventory costs.
Which way is it going to go on Thursday, Insiders? Who’s going to be vindicated and who’s going to be deflated? Give us your insights and predictions in the comments.
(via Home Media Magazine)