Blockbuster (BBI) managed to do it, under-perform dismal expectations.
Revenues of $1.24 billion (down 2% from Q2, down 5.7% y/y) and a $.20 per share loss (same as Q2, 5 cents worse than last year) were both worse than estimates. If that was not bad enough, the company’s “Total Access” program, the presumed savior of it, actually lost 500,000 subs in the latest quarter. What happened? In September they essentially ruined the advantage of the service by limiting the video trade-ins to 5 per month, and began charging more for the unlimited trade-ins. Any wonder people walked? Blockbuster is now actually trying to jettison “unprofitable” subscribers. Who are they talking about, those who actually use the service regularly? Have they been talking to execs at Sprint (S)?
Any good news? Sure. Online download increased 15%. But the problem here is again too little too late. Blockbuster did not begin to enter the online download game until around June and that put them 6 months behind their nemesis, Netflix (NFLX).
Blockbuster did close 526 stores in the last year and those still open saw sales essentially flat and while that may seem good, when you consider they are basically the only brick and mortar video store left, that is not good news. Again, I have been saying this since early August, just close them. Put the money you spend on the stores into more profitable ventures. Think of the labor savings alone!
Blockbuster is losing members from its program and it seems from Netflix’s latest earnings that they are going directly there. Why? NetFlix has a few easy to use options and when they change the program, it benefits users, it does not restrict their use of the program.
Blockbuster just cannot seem to accept the direction their industry has gone in and for shareholders, that is unfortunate.
