UPDATE 1-Coinstar sells e-payment business, cuts Q2 outlook

Wed May 26, 2010 5:27pm EDT

* Sells e-payment business to InComm for $40 mln

* Cuts Q2 outlook to below Wall Street view

* Shrs down 3 pct after market

May 26 (Reuters) - Redbox owner Coinstar Inc CSTR.O sold its electronic payment services business to InComm for $40 million and cut its second-quarter forecast to account for the sale.

Coinstar expects to record a one-time benefit of $5 million to $7 million in the second quarter from the sale.

InComm is a provider of gift cards, prepaid wireless products, reloadable debit cards, digital music downloads, content, games, software and bill payment solutions.

For the second quarter, Coinstar now expects earnings from continuing operations of 28 cents to 32 cents a share, on revenue of $363 million to $383 million. [ID:nWNAB3957]

In April, the Bellevue, Washington-based company had forecast earnings of 30 cents to 34 cents a share, on revenue of $370 million to $390 million.

Analysts on average were expecting earnings of 35 cents a share on revenue of $386.5 million, according to Thomson Reuters I/B/E/S.

Shares of Coinstar -- which provides DVD rental kiosks through unit Redbox Automated Retail LLC and operates coin-counting machines -- were trading down 3 percent at $51.15 in extended trade. They closed at $52.98 Wednesday on Nasdaq. (Reporting by Sweta Singh in Bangalore; Editing by Unnikrishnan Nair)

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