Blockbuster Inc.(NYSE: BBI): Q1 Earnings Preview

Blockbuster Inc.(NYSE: BBI) is scheduled to release its first-quarter 2010 financial results after the closing bell on Thursday, May 13, 2010. Analysts, on average, expect the company to report a loss of 14 cents a share on revenue of $933.25 million. In the year ago period, the company posted earnings of 12 cents per share on revenue of $1.12 billion.

Blockbuster Inc., together with its subsidiaries, primarily operates and franchises entertainment-related stores. The company offers movies and video games for in-store rental, and sale and trade, as well as sells other entertainment-related merchandise. As of September 2, 2009, the company operated approximately 7,100 stores throughout the Americas, Europe, Asia, and Australia.

The embattled company has seen its market share eroded in the past several years due to stiff competition from online DVD rental firm Netflix and Redbox kiosks. Coinstar’s RedBox self-service DVD kiosks offer movie rentals for $1 per day, while Netflix’s online DVD subscription allows customers to rent unlimited movies for $13.99 with two DVDs out at a time.Blockbuster has responded with its own $1-a-day movie kiosks, as well as with an online by-mail subscription service and instant movie downloading. But it appears that the innovations might be too little, too late. The company has continued to struggle with its heavy debt load and declining bricks-and-mortar business as it simultaneously attacks the digital space and kiosk business.

In the preceding fourth quarter, the Dallas, Texas-based company posted a loss o$435 million, or $2.24 a share, compared with a loss of $359.8 million, or $1.89 a share, in the year-earlier period. Excluding items, Blockbuster said its adjusted net loss was $44.3 million, or 24 cents a share, in the latest three months. Revenue fell to $1.08 billion from $1.31 billion. Analysts, on average, expected the company to report a loss of $0.14 per share on revenue of $1.08 billion for the quarter.

In a regulatory filing in March, the company said that it will likely file for bankruptcy if it's unable to address its debt load.Blockbuster's debt, including capital lease obligations, totaled $964 million as of Dec. 31, according to its financial filings. The company issued a similar warning nearly a year ago, but was able to improve its liquidity through widespread store closings and amended agreements with creditors to delay debt payments. It will have to make $112.5 million in principal payments on its debt this year.

As part of its plan to stave off bankruptcy, Blockbuster plans to close more stores and cut expenses by more than $200 million. It hopes to do a debt-for-equity swap with holders of its senior subordinated notes and intends to hold talks with holders of its Series A convertible preferred stock, the company said in the filing.

In 2009, Blockbuster closed 718 company-operated and franchised stores worldwide, including 572 in the U.S. It also sold its 184-store chain in Ireland. Blockbuster may shut as many as 545 stores this year, reducing the total to about 3,500, the company said in a regulatory filing.

Shares of the Blockbuster also got a boost in recent times from the closure of Movie Gallery, its closest competitor.

Earlier in April, the company said it is not in compliance with the New York Stock Exchange requirements for minimum market value. Management also said that it will ask shareholders to vote on a reverse stock split during the annual meeting to be held on June 26.

In terms of stock performance, Blockbuster shares have lost almost 66 percent over the past year.

Full Disclosure: None.

Blockbuster Inc.(NYSE: BBI): Q4 Earnings Preview 2009

Blockbuster Inc.(NYSE: BBI) is scheduled to release its fiscal fourth-quarter 2009 financial results for the period ending January 3, 2010 after the closing bell on Wednesday, February 24, 2010. Analysts, on average, expect the company to report a loss of 12 cents a share on revenue of $1.08 billion. In the year ago period, the company posted a loss of $1.89 per share on revenue of $968.70 million.

Blockbuster Inc., together with its subsidiaries, primarily operates and franchises entertainment-related stores. The company offers movies and video games for in-store rental, and sale and trade, as well as sells other entertainment-related merchandise. As of September 2, 2009, the company operated approximately 7,100 stores throughout the Americas, Europe, Asia, and Australia.

In the preceding fiscal-third quarter, the Dallas, Texas-based company posted a loss of $116.8 million, or $0.60 per share, compared to net loss of $20.6 million, or $0.11 per share, in the third quarter of 2008. Excluding costs associated with write-off of debt financing costs, store closures and severance, adjusted net loss applicable to common stockholders for the third quarter of 2009 totaled $38.3 million, or $0.20 per share compared to an adjusted net loss applicable to common stockholders of $17.8 million, or $0.09 per share, in the third quarter of 2008. Revenue slumped to $910.5 million from $1.16 billion. Analysts, on average, expected the company to report a loss of $0.11 per share on revenue of $1.01 billion for the quarter.

In an attempt to to boost all-important holiday sales, Blockbuster increased inventory and launched an aggressive advertising campaign during the fourth. However, in spite of these efforts, its performance during the holidays was well below expectations. Late in January, the company said that it now expects to report adjusted EBITDA for the 2009 year ended January 3, 2010 in the range of $195 million to $205 million, which corresponds to GAAP net loss in the range of $183 million to $193 million, excluding any impairment of goodwill and other long-lived assets.

Looking ahead to 2010, the company said it plans to further reduce costs and will remain conservative in use of capital expenditures.

Blockbuster has closed hundreds of stores in the past few years. In November the company said that it expects to close around 115 stores during the fourth quarter of 2009, which will be in addition to the 216 that have already been closed through the third quarter of this year. Earlier, the company had announced its plans to close up to 960 stores by the end of the year 2010.

The embattled company has seen its market share eroded in the past several years due to stiff competition from online DVD rental firm Netflix and Redbox kiosks. Coinstar’s RedBox self-service DVD kiosks offer movie rentals for $1 per day, while Netflix’s online DVD subscription allows customers to rent unlimited movies for $13.99 with two DVDs out at a time.Blockbuster has responded with its own $1-a-day movie kiosks, as well as with an online by-mail subscription service and instant movie downloading. But it appears that the innovations might be too little, too late. The company has continued to struggle with its heavy debt load and declining bricks-and-mortar business as it simultaneously attacks the digital space and kiosk business.

Recently, Standard & Poor's cut the video rental firm's corporate credit rating to CCC, it's lowest rating for a company that has not been ordered liquidated ("Extremely vulnerable financial security. Questionable ability to meet obligations unless favorable conditions prevail.") In a statement, S&P said, "The downgrade reflects our view that performance will remain very challenged and our concern that Blockbuster will not be able to transform its business model over the near term, as we had expected." strategy and plans to replace stores with kiosks and compete online with Blockbuster digital.

Industry experts feel that Blockbuster may soon become an irrelevant company with little chance of survival as it has not been really able to counter competition and adapt its business model as per the evolving industry dynamics and consumer preferences..

In terms of stock performance, Blockbuster shares have lost almost 70 percent over the past year. The company, shares of which closed Thursday at 36 cents, is facing a possible delisting threat from the New York Stock Exchange for having a stock price that has traded below $1 for more than 30 consecutive days.

Full Disclosure: None.