Blockbuster: Look Ma, No Bankruptcy
Why did Blockbuster release some of its fourth-quarter numbers today–two weeks before it was scheduled to do so? Because it wanted to impress investors who freaked out on Tuesday when the company had to swat away rumors that it was headed for Chapter 11.
Blockbuster (BBI) didn’t provide much detail. It boasted about fourth-quarter same-store sales and said 2008 earnings would be above expectations, and that’s about it. But it assured investors it was working “diligently” to figure out how to pay some $380 million in debt that comes due in August.
Alas, investors are giving the numbers mixed reviews. After Blockbuster put out its release, shares opened up at 61 cents–up almost 30 percent from Wednesday’s close. Now that the penny stock’s shareholders have thought it through, though, they’re selling again, and shares have dropped below 50 cents. At the beginning of the week, they were trading above $1 a share. A year ago, they were worth more than $3.
Related note: On Tuesday afternoon, as the Chapter 11 reports were surfacing, I happened to be talking to someone who worked with the company about a decade ago, when it still ruled the home video market with an iron fist. At the time, he said, Blockbuster used to get frequent calls from an entrepreneur who was desperate to get the video giant to work with, or even buy, his company. Good thing that never worked out for Netflix (NFLX) CEO Reed Hastings.