3 Min Read
LOS ANGELES (Reuters) - Blockbuster Inc raised more concerns about its viability as a business after again posting a wider-than-expected quarterly loss on Wednesday.
The company, which has blamed a weak holiday season, said it aimed to reduce costs by around $200 million, shut down 500 to 545 underperforming stores over time, and explore the sale of its remaining international assets to boost liquidity.
But analysts fear for the once-mighty nationwide chain's long-term future, after the company said in January it once again faced a disappointing holiday season.
The company said it was pondering a variety of options to try and shore up its business, including a recapitalization of its debt or equity. Blockbuster said it was talking with parties, including Rothschild Inc, to recapitalize its $1 billion debt.
Blockbuster said its studio partners continue to support it and embrace the company's push away from a pure brick-and-mortar model toward a multi-channel one that provides customers with movies both physically and digitally.
In an interview, Chief Executive Jim Keyes said Blockbuster was talking with cable, telecom and satellite companies about partnering with them to provide an a la carte digital movie offering.
Blockbuster, which has reported a quarterly profit just a handful of times in past years, is struggling to slash a huge debt load inherited a decade ago when it was spun off from Viacom Inc.
Now, it is losing customers to online rental companies such as Netflix, Web stores by the likes of Apple Inc, and industry innovators such as Coinstar's Redbox, which rents movies out of a growing network of bright-red stand-alone kiosks.
Investors have made their concerns felt. Its stock has plummeted from the lofty heights of about $20 to a mere 36 cents as of Wednesday.
"Management anticipates the report of the company's independent registered public accounting firm relative to the company's 2009 consolidated financial statements will contain an explanatory paragraph indicating that substantial doubt exists with respect to the company's ability to continue as a going concern," the company said in a filing on Wednesday.
"As the company noted, it intends to explore strategic alternatives, one or more of which could improve its liquidity."
Blockbuster reported a net loss of $434.9 million, or $2.24 per share, compared with a loss of $359.8 million, or $1.89 per share, a year earlier.
Excluding items such as impairment of goodwill and other long-lived assets, Blockbuster lost 35 cents per share, more than double the 17-cent loss expected, on average, by analysts, according to Thomson Reuters I/B/E/S.
Fourth-quarter revenue fell about 18 percent to $1.08 billion from $1.31 billion a year earlier. That matched analysts' average forecast of $1.08 billion.
Shares of Blockbuster fell to 34 cents in after-hours trade from a close of about 36 cents.
Writing by Edwin Chan; Editing by Steve Orlofsky and Richard Chang