Is BBI the next SIRI?

Amazing. Company does nearly $1B in revenues, better than what analysts expected for a single quarter, way more than Netflix & Redbox combined, yet you would think they are bringing in $100 or something.

They need to get operations in line, i.e. complete Euro assets transaction, close more underperforming stores, etc. They can not just file bankruptcy, its not that simple. BB just put together a bunch of new agreements with studios with respect to inventory and cost pricing. They do not want to lose these contracts. As a result, they put up their Canadian assets as collateral.

Apparently some folks just do not read what I write. So let me state again, Casey & Keyes have confirmed that there are several deals on the table right now with respect to the debt recap. They are going to announce the solution next month!!!!!

And again I am not saying to buy the stock, because we have no way of knowing what they are going to do. They could very well dilute the stock as a result of the debt recap arrangement. Anything can happen. That is why your best bet, if you wanna take one, is by playing the actual debt itself.

Yeah close every single store, when they are pulling in nearly $3B from those stores annually, not to mention there is another $1.4B up for grabs now that Movie Gallery has closed. Those movie gallery customers are B&M customers which is best suited for Blockbuster.

Bottom line is, nothing has really changed from this conference call. The situation is still what it is. The 800 pound gorilla is the 2012 notes and how they can get rid of them at the least possible cost to the company. We knew ahead of going into this that cash flow would come into play towards the end of this year, and operational logistics would need to be executed efficiently in order for the digital transformation to get footing. The really game changing announcement is coming in June. And unfortunately there is really no way to play it from the stock perspective IMHO. Because depending on how they handle the debt recap, the stock could either go parabolic or implode.
 
Quote from 335ifurby:

well... i haven't been inside a blockbuster store in i don't know how many years... and all i remember from the stores was that you paid $3 or something for a movie and returned it late to pay a fee of $10... so basically you could just buy the thing... i use netflix and redbox.... more netflix since i am very very lazy.... blockbuster isnt worth the land its sitting on : ( .... oh the stock... right ... well i think the company is terrible and has competition from every single possible place you could imagine... so would i buy this thing hoping its the next SIRI.... NO .... because even SIRI was a terrible idea.... why pay for stuff thats free in the first place : ) (335i
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Well let me get you up to speed than. Blockbuster is now a multichannel business. If you still choose to walk into the store, you can get any old movie releases for the same price as Redbox .99, but with a much bigger selection obviously. Hot brand new releases are unable to found at Redbox and Netflix. Only Blockbuster for only $1.99 the first night. There are no late fees anymore. Just like with Redbox, if you keep a movie for 4 days, they charge you .99 per day. Same thing with Blockbuster.

Blockbuster also has mail plan now including BLURAY which is significantly cheaper and better than Netflix.

Blockbuster also has a complete online/on-demand library of movies including new releases that you can either rent or buy, cheaper than any cable on demand subscriber.

Blockbuster is launching kiosks all over the country, and coming soon digital download functionality.

The end game here is BLOCKBUSTER EVERYWHERE. One single platform ---- Any movie, anywhere, anytime, anyhow. Including ipads, cell phones, laptops, PC, TV, you name it. Blockbuster will provide it.
 
Quote from S2007S:

Im not just thinking it, this says it all!!!!


While Blockbuster could benefit from the closure of rival video rental chain Movie Gallery, it got no relief in Q1, as the company swung to a $65.4 million net loss from a $27 million profit the year before. It’s clear that the strategy against more nimble rivals like the mail-order and download business of Netflix (NSDQ: NFLX) and Redbox kiosks are taking customers away from the brick-and-mortar based Blockbuster (NYSE: BBI).
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Revenues were actually better than expected. The problem was that in Q1 they had an enormous payment to make, like $40M or $48M I think on the principle & debt interest for the newly issued JPMorgan secured notes. Plus they got hit with another $20M on store closings, all within the quarter. If anyone had just dug a little bit into the facts, they would have seen that.

Its really not so much that rivals are taking so many people away. Last I checked they still have 50M subs.

But this conversation is all moot. Next month is it. We will know the future or lack there of.

IMHO once they get this multi channel platform running the way it should, and start actually marketing, they would really give folks a run for their money. In the end its about service and getting what you want, when you want it. Blockbuster is providing this at a lower cost in the marketplace than anyone else can or will. This is due to the fact they have set the strategic partnerships in place and negotiated down specific cost structures relating to their business model.
 
Oh & just to give you a little perspective.

Last trade price on the stock this AM = .39

Thats a near 22% tank from yesterdays close

Last trade price on the 2012 bonds this AM = $21.05
Which is pretty much where it was yesterday. In the last 10 minutes of open stock market hours before 4PM yesterday, the bonds traded between $21.00 - $22.00

And another thing, don't be lured into the stock just because you think its cheap here at .39 and you can buy a bunch of shares. Means nothing.

The reality is and most don't realize, but with $5K cash you could buy nearly $24K face amount of the 2012 notes right now.
 
BTW here are the closing comments from Keyes. There is some decent substance in here for what is shortly to come and how they are going to deal with their financial and logistical issues:

James Keyes

Thank you, operator. Thanks, everybody, for your questions. As you can see, we're continuing to focus both on the recapitalization of the company, but also on transforming the core business, and making the necessary adjustments to position ourselves for the future. I just want to highlight in closing the very unique opportunities that we have. We are now the only national chain with day-and-date availability cross-channel across virtually all movies, a 28-day window advantage on a number of new releases.

We have the advantage of the Movie, Hollywood closings that will provide some tailwinds to us. We have strategic partnerships in vending now and very active discussions underway for By Mail and digital. And we have what we think is a world-class digital streaming offering, one of the few that offers new releases, availability of new releases. So we have a lot going for us.

Yes, we have our near-term challenges. But we have every reason to stay the course and to make sure that we have adequate liquidity going forward, and doing the things that we can do to provide the balance sheet necessary to continue with this exciting transformation.

We appreciate your continued support. I know it's been challenging, not only for you, but for us. But we're really looking forward to sharing more with you at the shareholder's meeting coming up at the end of June. Thank you very much for your continued support. Okay, operator, that concludes our call for today. And you can go ahead and release the call.

Thank you.
 
Actually, I was looking at their numbers. I don't see how a Ch. 11 will help them anymore. Their operating costs still surpassed their revenues and that's not taking into account the interest payments.

They need areas of growth. Their revenues are falling and their operating costs still remain the same.
 
Quote from mililani:

Actually, I was looking at their numbers. I don't see how a Ch. 11 will help them anymore. Their operating costs still surpassed their revenues and that's not taking into account the interest payments.

They need areas of growth. Their revenues are falling and their operating costs still remain the same.
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Thats what they are doing. Its going to take at least another quarter or two for the new revenue streams to grab footing. They are now getting into digital, download/on-demand, & blockbuster express kiosks. They should really get a partner to run with the mail plan.

You are right on the expense side. They need to buckle their belt which is what they are in the process of. By end of year 2010, BB should see $200M projected in cut expenses.

Here are a couple numbers worth noting and putting in perspective taking directly from their PR official news release:

First quarter 2010 adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”), which excludes stock-based compensation expenses, costs associated with lease terminations, severance, and professional fees related to the Company’s recapitalization initiatives, was $31.1 million

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Operating loss for the first quarter of 2010 was $29.4 million, compared to operating income of $50.2 million in the first quarter one year ago. Adjusted operating income, which excludes costs associated with store closures, including lease terminations, severance, and professional fees associated with our recapitalization initiatives, was $8.6 million for the first quarter of 2010
 
Here it is - Just released last night:

((Also more recent same store sales are rocking and blow Q1 SSS numbers out of the water thanks to movies like Avatar.))


Twelve Months Free Cash Flow Turns Positive for Blockbuster

05/19/2010

New York, NY, May 19, 2010-Free-Cash-News reports that Free Cash Flow for Blockbuster Inc. (NYSE:BBI) for its twelve months ended March 31, 2010 was a positive $37,900,000, compared with a negative Free Cash Flow of $(123,400,000) for the comparable year earlier twelve months. Free Cash Flow for the most recent twelve months also reached a two year high.

For Blockbuster's quarter ended March 31, 2010 Free Cash Flow was $(54,800,000), compared with $(95,700,000), a 43% improvement over the comparable year earlier quarter.

The shares of Blockbuster were recently trading at $0.38.

Free-Cash-News utilizes the following definition or calculation for its published Free Cash Flow news and reports:

Free cash flow is defined as cash flow from operations or operating cash flow plus or minus capital expenditures. "Capital Expenditures" is a line item, which can be found in the Cash Flow From Investments section of a company's Cash Flow Statement which is filed quarterly in the 10Q and 10K reports that are required to be filed by publicly traded companies with the U.S. Securities & Exchange Commission.

Free-Cash-News publishes quarterly updates on Free Cash Flow for approximately 8,200 publicly traded U.S. companies. It also monitors and publishes news and special reports on 216 industry groups. More information on Free-Cash-News is available at www.StockTrendNews.com.

Copyright 2010 StockTrendNews.com

http://www.stocktrendnews.com/index.php?fuseaction=public.showView&story_id=741273
 
I like BBI's online rental service, but there is a lot of competition, and not just from netflix. If apple or amazon enter the online dvd rental market, kiss bbi goodbye.
 
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