Blockbuster may finally be trying to compete with Netflix (NFLX).
Blockbuster (BBI), is finally it seems working on a set-top device for streaming films directly to TV sets. This comes months after a similar announcement from Netflix (NFLX) LG Electronics at CES and word they may embed the technology in Micrsoft’s (MSFT) Xbox consoles. The device is expected to utilize Blockbuster’s access to Movielink’s 6,000 strong Movie catalog just as soon as the content is migrated to Blockbuster.com (sometime before June).
Does this make shares a buy? No.
In March Blockbuster announced that for fiscal 2008, it expects to deliver adjusted EBITDA in the range of $290-$310 million, which corresponds to GAAP financial measures of operating income (EBIT) in the range of $113-$133 million and net income in the range of $5-$25 million. Even at the high end of the range that equates to EPS of only $.13 cents a share which means shares currently trade at 25 times the top end of estimates and 108 times the low end. Either way, too expensive.
Here is the thing. The box top game is a race. The first out with an affordable offering wins. This isn’t something I envision people swapping in and out of. The set-top they buy initially will be the one they use for quite some time. I am still mystified at the apparent blase’ attitude by Blockbuster with this.
From mail rentals, to online rental, and now the box set they have consistently been behind the competition. This is the right move to make, they just should have made it maybe in May last year?
Disclosure (“none” means no position):None
Visit the ValuePlays Bookstore for Great Investing Books
This work is licensed under a Creative Commons Attribution 2.5 License.
One reply on “Blockbuster Box? Late to the Game Again”
Your blog is very interesting and informative. Blockbuster, Inc. is an international company providing in-home entertainment. It is the largest video rental chain in the world. Blockbuster has been of great frustration to me. I never got the ordered items. However, my friends are rather satisfied with the company. I have posted my comments and reviews to http://www.pissedconsumer.com. Hope others will not be tricked in.