Blockbuster posts wider loss

LOS ANGELES (Reuters) - Blockbuster Inc (BBI.N), the No. 1 U.S. movie rental chain, posted a wider third-quarter net loss on Thursday, as the company closed stores around the world and refocused its strategy on boosting sales at its remaining stores and away from the online battle with Netflix Inc.

Blockbuster's shares dropped as much as 5 percent after it missed Wall Street's revenue target and subscriber growth for its online DVD rental service stalled.

Blockbuster reported a net loss of $35 million, or 20 cents per share, compared with a year-ago loss of $24.7 million, or 15 cents per share.

The latest quarter's results include 5 cents per share in severance and lease termination costs.

Total revenue in the quarter fell nearly 6 percent to $1.24 billion, due mostly to the closure and sale of 526 stores.

Analysts, on average, expected a loss of 18 cents per share, not including the severance and lease termination costs, and revenue of $1.29 billion, according to Reuters Estimates.

The company said it began implementing a plan in the third quarter to reduce annual costs by $45 million by cutting jobs and streamlining its in-store and online corporate structures.

Blockbuster Online finished the quarter with 3.1 million subscribers, down 500,000 from the second quarter, as the company pulled back on its marketing spending to focus on near-term profitability.

"Some people were expecting a little heavier revenue number, especially with such a positive (movie) release schedule," Pali Capital analyst Stacey Widlitz said. "I thought it was an in-line quarter with what I was expecting."

Widlitz said the company had improved margins by shedding some 300,000 non-paying online subscribers and by limiting free in-store DVD swaps that had been the drawing card for its popular Total Access rental plan.

Despite the quarterly drop in overall revenue from its smaller store count, Blockbuster saw worldwide same-store rental revenue grow 1.1 percent over last year's third quarter.

Domestic same-store rental revenue increased 2.3 percent and international same-store rental revenues fell 2.8 percent.

Worldwide same-store retail revenue for the quarter grew 14.2 percent over last year mainly due to a 79.5 percent rise in international same-store game retail revenues.

Blockbuster shares were down 3.9 percent, or 21 cents, at $5.05 on the New York Stock Exchange.

(Reporting by Martinne Geller and Gina Keating)