DOW JONES NEWSWIRES
Blockbuster Inc. (BBI) swung to a fourth-quarter net loss on a
$435 million goodwill write-down, as revenue and margins
dropped.
The movie rental company also issued a 2009 earnings view
slightly below analyst estimates, saying it would focus on a "more
conservative approach" to its capital-intensive initiatives but
continue its effort to diversify the company.
In addition, Chairman and Chief Executive Jim Keyes said
Blockbuster reached agreements with JPMorgan Chase & Co. (JPM)
and two of its largest lenders to amend and extend its revolving
credit facility through Sept. 30. The commitments from the lenders
represent 65% of the expected aggregate principle amount of the
extended line.
Blockbuster stock jumped 13% after-hours to $1.01 as earnings
excluding items trumped analysts' expectations. Shares are down
two-thirds in the past six months.
The company has been scrambling in a tough credit climate to
restructure its debt, and earlier this month hired a law firm to
explore restructuring options, but said it doesn't intend to file
for bankruptcy.
Blockbuster on Thursday reported a fourth-quarter net loss of
$359.8 million, or $1.89 a share, compared with year-earlier net
income of $41 million, or 18 cents a share. Excluding items such as
the write-down, which Blockbuster warned about earlier this month,
earnings rose to 40 cents a share from 26 cents a share.
Revenue dropped 12% to $1.38 billion on the stronger dollar and
weaker results from the company's by-mail rental service.
Analysts polled by Thomson Reuters expected per-share earnings
of 25 cents on revenue of $1.52 billion.
Gross margin fell to 49.3% from 50.9% on the revenue drop.
Earlier this month, the company reported U.S. same-store sales
rose 4%, driven by increased sales of games, game merchandise and
consumer electronics. U.S. same-store sales grew in all four
quarters of the year, a good sign for the company after five years
of declines.
Looking ahead, the company expects adjusted earnings before
interest, taxes, depreciation and amortization of $305 million to
$325 million, compared with Wall Street's view of $336.8
million.
Blockbuster has been looking for ways to diversify its business,
mulling a $1 billion-plus bid for Circuit City Stores Inc. (CCTYQ),
which it ultimately dropped last summer. Circuit City has since
gone out of business.
Additionally, Blockbuster is facing stiff competition from
online rival Netflix Inc. (NFLX), pioneer of DVD rentals by mail,
as well as Internet sites that let consumers stream movies and
television shows, often for free.
-By John Kell, Dow Jones Newswires; 201-938-5285;
john.kell@dowjones.com