Blockbuster Swings To 4Q Loss On Write-Down; Shares Jump

   DOW JONES NEWSWIRES 
 

Blockbuster Inc. (BBI) swung to a fourth-quarter net loss on a $435 million goodwill write-down, as revenue and margins dropped.

The movie rental company also issued a 2009 earnings view slightly below analyst estimates, saying it would focus on a "more conservative approach" to its capital-intensive initiatives but continue its effort to diversify the company.

In addition, Chairman and Chief Executive Jim Keyes said Blockbuster reached agreements with JPMorgan Chase & Co. (JPM) and two of its largest lenders to amend and extend its revolving credit facility through Sept. 30. The commitments from the lenders represent 65% of the expected aggregate principle amount of the extended line.

Blockbuster stock jumped 13% after-hours to $1.01 as earnings excluding items trumped analysts' expectations. Shares are down two-thirds in the past six months.

The company has been scrambling in a tough credit climate to restructure its debt, and earlier this month hired a law firm to explore restructuring options, but said it doesn't intend to file for bankruptcy.

Blockbuster on Thursday reported a fourth-quarter net loss of $359.8 million, or $1.89 a share, compared with year-earlier net income of $41 million, or 18 cents a share. Excluding items such as the write-down, which Blockbuster warned about earlier this month, earnings rose to 40 cents a share from 26 cents a share.

Revenue dropped 12% to $1.38 billion on the stronger dollar and weaker results from the company's by-mail rental service.

Analysts polled by Thomson Reuters expected per-share earnings of 25 cents on revenue of $1.52 billion.

Gross margin fell to 49.3% from 50.9% on the revenue drop.

Earlier this month, the company reported U.S. same-store sales rose 4%, driven by increased sales of games, game merchandise and consumer electronics. U.S. same-store sales grew in all four quarters of the year, a good sign for the company after five years of declines.

Looking ahead, the company expects adjusted earnings before interest, taxes, depreciation and amortization of $305 million to $325 million, compared with Wall Street's view of $336.8 million.

Blockbuster has been looking for ways to diversify its business, mulling a $1 billion-plus bid for Circuit City Stores Inc. (CCTYQ), which it ultimately dropped last summer. Circuit City has since gone out of business.

Additionally, Blockbuster is facing stiff competition from online rival Netflix Inc. (NFLX), pioneer of DVD rentals by mail, as well as Internet sites that let consumers stream movies and television shows, often for free.

-By John Kell, Dow Jones Newswires; 201-938-5285; [e-mail]