Coinstar bets on "Man of Steel," "Iron Man" to boost rental business
(Reuters) - Coinstar Inc raised its full-year adjusted profit forecast as it bets on a slate of movies scheduled to be released in the third quarter to boost its Redbox video rental business, sending its shares up 8 percent after the bell.
Coinstar, which plans to change its name to Outerwall Inc, acquired Redbox in 2008 for its DVD kiosk business, and it has become its primary source of sales since then.
Redbox, which accounted for about 87 percent of Coinstar's sales of $2.20 billion in 2012, offers self-service movie rentals at about 43,700 kiosks, where consumers can rent or buy movies and video games.
The movies scheduled in the third quarter are driving Coinstar to raise its forecast, Wedbush Securities analyst Michael Pachter told Reuters.
"The third quarter is the big one. It's going to be super strong," he said.
He said he expected Coinstar to do well owing to highly anticipated movies such as "Man of Steel", "Oblivion" and "Iron Man 3". He said some people would also want to watch movies that don't do well at the box office without spending too much.
"I even think some of the movies that flop in the theater will do better on rental like "Jack the Giant Slayer" and "Hansel and Gretel."
He said the box office was down 6 percent in the quarter, and despite that Coinstar's revenue went up marginally.
Coinstar raised its full-year adjusted earnings forecast to $5.05-$5.55 per share from $4.91-$5.51.
Analysts were looking for $5.09 per share, according to Thomson Reuters I/B/E/S.
Coinstar's net income fell to $22.6 million, or 78 cents per share, in the first quarter from $53.7 million, or $1.65 per share, a year earlier.
Excluding items, the company earned 93 cents per share.
Revenue rose 1 percent to $574.7 million.
Analysts had expected adjusted earnings of 86 cents per share on revenue of $579.4 million.
Coinstar also plans to change its ticker symbol on the Nasdaq to "OUTR".
Coinstar shares, which have risen about 9 percent in the last three months, were up 6 percent in after-market trading on Thursday. They closed at $55.03 on the Nasdaq.
(Editing by Ted Kerr, Maju Samuel)