AllThingsD » fixed expenses http://allthingsd.com Sun, 12 Feb 2012 02:05:24 +0000 en hourly 1 http://wordpress.org/?v=3.3.1 http://allthingsd.com/theme/images/logo-rss.jpg All Things Digital http://allthingsd.com/ 144 22 Blockbuster: Needham Initiates at "Hold" http://allthingsd.com/20080819/blockbuster-needham-initiates-at-hold/ http://allthingsd.com/20080819/blockbuster-needham-initiates-at-hold/#comments Tue, 19 Aug 2008 20:36:54 +0000 Tiernan Ray http://voices.allthingsd.com/?p=2836 On the heels of Netflix’s (NFLX) problems last week getting DVDs out the door to subscribers, Needham & Co. analyst Charlie Wolf initiated coverage this morning of Blockbuster (BBI) with a “Hold” rating. Wolf says that while the company is throwing lots of things at the wall to “see if it sticks,” it’s not clear the company will get the increase in same-store sales it needs to offset the drag on earnings from its 6,000 retail outlets. He did not offer a target price.

“Blockbuster’s major problem lies in its base of 6,000 stores,” writes Wolf. “The company’s challenge and opportunity is wrapped up in the relatively large fixed expenses entailed in operating its stores.” Blockbuster revenue barely covers the cost of running the stores, but even a modest tick up in same-store sales could “transform a basically break-even operation into a highly profitable one,” writes Wolf.

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