* Q4 cont ops EPS $0.68 meets Street view
* Sees Q1 EPS cont ops $0.15-$0.25 vs est $0.57
* Sees Q1 rev $400-$420 mln vs est $404.2 mln
* Shares down 10 pct after market
By Supantha Mukherjee
BANGALORE, Feb 3 Coinstar Inc (CSTR.O), the
electronic kiosk company forecast first-quarter earnings much
below Street view, hurt by excess inventory purchased at its
Redbox unit, sending its shares down 10 percent in after-market
"It just doesn't make sense that they bought twice as much
inventory as they need. I don't accept that," Wedbush
Securities analyst Michael Pachter told Reuters.
"I can only conclude that they are being extremely
conservative when they guide for the first quarter."
Before the December holiday season, which was Redbox's
first holiday season with 28-day delayed DVD titles, Coinstar
removed older inventory early and purchased new titles
expecting higher demand, which did not materialize.
As part of a settlement last year, Redbox had agreed with
News Corp's (NWSA.O) Twentieth Century Fox, Universal Pictures
owned by General Electric Co (GE.N) and Time Warner Inc's
(TWX.N) Warner Bros, to wait for 28 days after a DVD title is
released before offering them for rent.
In the first quarter, gross margins will continue to be
challenged as a result of the purchasing decisions made in the
fourth quarter, including higher-than-necessary purchases for
January titles, Chief Financial Officer Scott Di Valerio said
on a conference call.
"They have to prove now to investors that the problem that
they have with buying too much inventory is something they can
correct and then they have to do it," analyst Pachter said.
The Bellevue, Washington company, which courted controversy
with Hollywood for Redbox's $1 a night DVDs, forecast
first-quarter earnings from continuing operations of 15-25
cents a share, on revenue of $400-$420 million.
Analysts were expecting earnings of 57 cents a share, on
revenue of $404.2 million, according to Thomson Reuters
However, the company expects strong growth in the third
quarter and solid growth in the fourth quarter.
Shares of the company were down $4.47 at $39.77 in trading
after the bell. The stock closed at $44.24 on Wednesday on
(Reporting by Supantha Mukherjee in Bangalore; Editing by