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Blockbuster stock soars 40 percent

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Old 04-20-2010, 05:45 AM   #1  
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Exclamation Blockbuster stock soars 40 percent

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LOS ANGELES (Hollywood Reporter) The hottest stock in entertainment in the past week has been Blockbuster Inc, which soared 40 percent on Monday and is up 87 percent in the past three trading days.

The video rental chain's stock is up on massive volume as well -- 56 million shares on Monday compared with the 8 million average -- but not much discernible news.

Apparently investors, and at least a few speculators, are gaining confidence that Blockbuster won't need bankruptcy to crawl out from under its almost $1 billion debt. They also might be getting comfortable with the idea that Blockbuster won't be delisted from the New York Stock Exchange for having too small a market cap. As of Monday, it was $118 million, higher than NYSE's minimum standard.

Blockbuster said Friday that it has rescheduled its shareholders' meeting from May 26 to June 24. The extension will help the company "complete one or more of our ongoing recapitalization initiatives prior to the annual meeting, possibly resolving our NYSE noncompliance."

Blockbuster's shares closed at 56 cents Monday, and the company is contemplating a reverse stock split to raise the price of each share, which also is something NYSE would like to see because it generally is not keen on penny stocks.

Investors might also be eyeing the studio deals Blockbuster has been striking that give it a four-week head-start over Redbox and Netflix for renting new-release DVDs. And Blockbuster's kiosk venture with partner NCR is on track to close out June with 7,000 kiosks and end the year with 10,000. And in June the kiosks will begin selling new releases, complete with shrink-wrapped packaging, Blockbuster's highflying stock of the past three days is a stark contrast from its first quarter, when it sank 62 percent.

http://news.yahoo.com/s/nm/20100420/..._blockbuster_1

Last edited by dsskid; 04-20-2010 at 08:16 AM.. Reason: Forgot to add link to article
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Old 04-20-2010, 06:58 AM   #2  
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Some signs of life from the old girl. However, the studios are going to soak Blockbuster plenty for that 4 week jump on new releases. Obviously that would be a huge income generator for Blockbuster, but I can't help but think it'll still cost too much. And it will add greatly to the debt load.
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Old 04-20-2010, 08:04 AM   #3  
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Some signs of life from the old girl. However, the studios are going to soak Blockbuster plenty for that 4 week jump on new releases. Obviously that would be a huge income generator for Blockbuster, but I can't help but think it'll still cost too much. And it will add greatly to the debt load.
What was Blockbuster's alternative, fold up the tent and go home? I don't think they were ready for that.

I'm sure it did cost, but maybe not as much as we may think.

Even though the studios want to sell the movies, they also want the income from rentals, and I'm sure the studios want to maintain as many vehicles to get their product into the hands of the consumer, and competition for their rental stream as well, so it's adventageous for them to keep BB afloat. If BB went bye-bye, Netflix could dictate the terms with the studios, since they would be the only major rental venue left (other than redbox).

Last edited by dsskid; 04-20-2010 at 08:10 AM..
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