* Cuts Q3 core diluted earnings forecast to $0.82/shr to
* Reduces Q3 revenue expectations to $569 mln-$589 mln
* Shares fall 20 pct after the bell
By Chandni Doulatramani
Sept 16 Outerwall Inc, operator of the
Redbox video rental kiosks, slashed its third-quarter and
full-year earnings forecast as average transaction size fell
below its expectations due to higher discounts, sending its
shares down 20 percent.
The heavy discounting drove consumers toward more
single-night rentals, the company, earlier known as Coinstar,
"The revenue per person was less than they thought. They had
many rentals, but fewer nights rented," First Analysis
Securities Corp analyst Lawrence Berlin said. He has an
"overweight" rating on the stock.
Dougherty & Co analyst Steven Frankel said the discounts
were on single-night rentals.
Outerwall now expects core diluted earnings of 82 cents to
94 cents per share for the third quarter ending Sept. 30, down
from the $1.36 to $1.51 per share it forecast earlier. The
company is scheduled to report quarterly results on Oct. 24.
The company also lowered its revenue forecast to $569
million-$589 million from the $604 million-$630 million it
Outerwall acquired Redbox for its DVD kiosk business in
2008, and it has become its primary source of sales since then.
Analyst Berlin also expressed concerns about the company's
performance in the fourth quarter since many movies supposed to
be released in the quarter have been pushed to later in the
quarter or the first part of next year.
Outerwall cut its core diluted earnings to between $4.72 and
$5.12 per share for the full year, from its previous estimate of
$5.76 to $6.26 per share.
The company now expects revenue of $2.27 billion to $2.34
billion, down from its earlier forecast of $2.37 billion to
Outerwall shares were down at $45.00 after the bell. They
closed at $55.97 on the Nasdaq on Monday.