Blockbuster Issues Earnings Warning: Shares Fall 32 Percent

Discussion in 'Archived Threads 2001-2004' started by MatS, Dec 18, 2002.

  1. MatS

    MatS Screenwriter

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    suprised this isn't being discussed here
    I have a feeling no one will be crying BB a river
    maybe Ebert's words are more powerful than we ever thought [​IMG]
    http://www.hometheaterforum.com/htfo...hreadid=113018
    Associated Press
    Blockbuster Issues Earnings Warning
    Wednesday December 18, 6:29 pm ET
    Blockbuster Issues Earnings Warning As Video Rentals Slow; Shares Fall 32 Percent
    DALLAS (AP) -- Shares of Blockbuster Inc., the nation's largest video rental chain, fell 32 percent Wednesday after the company lowered its fourth-quarter and full-year sales forecasts.
    "The unprecedented number of movie titles available for sale at deeply discounted prices, this year's DVD gift-giving phenomenon and a compressed holiday season" contributed to the weaker sales, Blockbuster Chairman and Chief Executive John Antioco said.
    The company now expects a revenue percentage increase in the "low-single digit range" versus the "low- to mid-teen range" previously forecast for the fourth quarter.
    The company reported revenue of $1.36 billion for last year's fourth quarter ended Dec. 31. One analyst surveyed by Thomson First Call expects the company to report revenue of $1.71 billion for the quarter.
    For the year, Blockbuster expects revenue of more than $5.5 billion, resulting in profit percentage point growth in the "low-single digits" and earnings of $1.03 to $1.10 a share.
    Blockbuster, a unit of Viacom Inc., had been expecting 2002 profit percentage point increases in the "mid-single digits," and earnings of about $1.31 a share.
    Analysts were expected full-year earnings of $1.31 a share and revenue of $5.99 billion, according to First Call.
    Blockbuster reported cash earnings, excluding charges, of $1.01 a share on revenue of $5.16 billion for the year ended Dec. 31, 2001. The company's loss for 2001 was $240.3 million, or $1.35 a share, including items.
    "Blockbuster has experienced a significant slowing of movie rentals since Thanksgiving, as consumers are attracted to the discounted prices offered by mass merchants on new DVD titles," said SWS Securities analyst Harry Katica.
    Katica, who doesn't own stock in the video rental company, lowered his investment rating on Blockbuster to "market outperform" from "strong buy."
    Shares of Blockbuster closed Wednesday at $13.13 on the New York Stock Exchange, down $6.27, or 32 percent. The day's weakest level of $13.10, at that point, was a new 52-week low, surpassing the prior low of $17.25 set on July 24.
    Blockbuster's warning dragged down rivals Hollywood Entertainment Corp., the No. 2 video store chain, Movie Gallery Inc. and Netflix Inc. The three video rental chains issued statements, reaffirming their earnings forecasts.
     
  2. Josh Simpson

    Josh Simpson Supporting Actor

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    I play violin. Let me get it out and play a song for them. [​IMG]
     
  3. Matt Birchall

    Matt Birchall Supporting Actor

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    [JerrySeinfeld]That's a shame.[/JerrySeinfeld]
     
  4. Dan Hitchman

    Dan Hitchman Cinematographer

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    I shall cry for them... one single tear.

    Dan
     
  5. BrentPollard

    BrentPollard Second Unit

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    Maybe if they increase the number of P&S only versions of movies things might pick up. [​IMG]
     
  6. Peter Overduin

    Peter Overduin Supporting Actor

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    Here in Chilliwack, BC they just opened a store. It took them months to get it done, and they still have not stocked almost half thge shelving units in the store. If this incompetence is indicative of how the chain is operated, I am not surprised by their travails.
     
  7. Scott Weinberg

    Scott Weinberg Lead Actor

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    Best news I've read all week. Hopefully this will snowball.
     
  8. Neil Joseph

    Neil Joseph Lead Actor

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    Let us see what "forceful demands" the chain places on the studios now as a result.
     
  9. Jeff Bamberger

    Jeff Bamberger Second Unit

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    There was a good article on this in USA Today this morning.
    The funny thing about it is that CEO Antioco sort of tried to say that we are in a seasonal period where sales tend to outweigh rentals...hence, the reduction in revenues right now. But then he follows that with a quote that says something like "well, early next year we have titles coming out like Barbershop and Bourne Identity...these are not collectible titles".
    I scoffed at this. At least to us, here at HTF, any DVD is collectible. If it's a movie you really like, or a movie you never saw in the theater and want to see without having to pay theater prices, babysitters, snacks, etc...., then buying a DVD is a viable option, and you get to keep it.
    What hurt BB is that they waited too long to realize that the success of DVD was due in almost every part to sell-through pricing. IF BB had not wasted their time trying to push rental pricing on DVDs and had moved quicker towards pushing sales, they may not be in the quagmire they are in right now.
    I found a link to the article:
    http://www.usatoday.com/money/indust...-outlook_x.htm
     
  10. John J Nelson

    John J Nelson Stunt Coordinator

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    You hear this? This is the world's smallest violin playing just for Blockbuster.
    [​IMG]
    -- J.
     
  11. Sam_K

    Sam_K Stunt Coordinator

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    Is it possible Blockbuster lost a lot of customers who want OAR? At least I'm one of the customers they lost.
     
  12. Jesse Skeen

    Jesse Skeen Producer

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    One word to increase their business: PORN! [​IMG]
     
  13. Shayne Lebrun

    Shayne Lebrun Screenwriter

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  14. Josh Dial

    Josh Dial Cinematographer

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    How did Santa know what to get me this year? I didn't even send him a list [​IMG]
    cheers!
    Josh
     
  15. SteveA

    SteveA Supporting Actor

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    I bet Blockbuster will renew their push for a rental-pricing window for DVDs.
     
  16. David Rogers

    David Rogers Supporting Actor

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    Darwin in action.

    Every now and then, occasionally, almost rarely, evolutionary forces act for good in capitalistic systems, rather than being subverted by those who want to keep failed ideas working.

    Blockbuster's idea is to rent you only P&S, edited discs at a quarter of the price to buy, frequently manufacture added fees to attach to the rentals, and do whatever they can to use their size (rather than consumer support) to maintain their business model.

    Nice to see consumers might be winning one for once. Bye bye Blockbuster, see ya, won't miss ya, don't care if you crash and burn. Richly deserved.

    Now if only Wal-Mart would go under, DVD might be in decent shape.
     
  17. danak

    danak Second Unit

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    What exactly is rental pricing? I've seen that mentioned a few times now but I've never seen it exactly defined.

    Also, I tend to rent most of the DVDs I watch and buy very few (probably a 90/10 split). I rent mostly from Netflix but I hit Blockbuster on occasion. Does anyone know if renting helps the movie companies at all (ie, those who make the movies, like Paramount, Universal) or do the rental companies get all the revenue?
     
  18. Jeff Kleist

    Jeff Kleist Executive Producer

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    Rental pricing is a holdover from VHS. Basically a new videotape at first release would be $80-100, and the video stores would get a roughly 6 month window to rent and then sell off their excess copies before the sell-through VHS. DVD really started its crumble because like laserdisc it was available day 1, and at $25-35 SRP was actually affordible. Around the same time they switched to revenue sharing, where copies are provided at about $3-4 apeice, but the store splits the $$ with the studio.

    Revenue sharing was something cooked up by Blockbuster, but now with so many people buying their DVDs instead of renting, it's really killing them.
     
  19. Jesse Skeen

    Jesse Skeen Producer

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    Blockbuster should have bought into DIVX when they had the chance! [​IMG]
     
  20. Ron-P

    Ron-P Producer

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    I shall crack open a nice cold beer tonight and toast at their loss while I watch my Hollywood Video Widescreen DVD rental.
    Peace Out~[​IMG]
     

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