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Posted
May 09 2008, 10:07 AM
by
Kim Peterson
Blockbuster wants to buy Circuit City for $1.3 billion, but just about everyone has chalked up this proposal as ridiculous because Blockbuster doesn't have that kind of cash. Good thing the company has Carl Icahn in its corner. The billionaire investor -- and Blockbuster's largest shareholder -- said he'll buy Circuit City himself if Blockbuster can't cough up enough money for the $1.3 billion deal. With an offer like that on the table, Circuit City has stopped giggling and is starting to seriously think about the deal. It's hired Goldman Sachs to help it explore options. Circuit City reminded everyone today that it hasn't made any decisions yet, but one thing is clear. this electronics chain is in play. And investors couldn't be happier; shares are up 9% today. Blockbuster shares are down slightly.
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Posted
Apr 25 2008, 06:19 AM
by
Kim Peterson
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Netflix shares had run up 78% from mid-January -- a considerable accomplishment helped along greatly by Blockbuster's ongoing struggles. But the stock price tanked this week, with investors acting the way my cats do when the vacuum is turned on. Instead of enjoying the good news (a solid first quarter, a big subscriber increase and a virtual lock on the DVD-by-mail market), investors overreacted and dumped Netflix over the bad. Netflix lowered its full-year profit projections, partly because it's spending more to build out a service that streams movies over the Internet. The company will also start charging more to customers who want to rent high-definition Blu-ray discs. Gross margin dropped more than 4%
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Posted
Apr 14 2008, 12:19 PM
by
Kim Peterson
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Does one loser plus one loser equal a winner? Not in the case of Blockbuster, whose offer to buy Circuit City is being met today with near-universal derision and head-scratching. The video chain, which has been in a losing battle with Netflix, has offered as much as $1.3 billion for Circuit City. That's more than a 50% premium to Circuit City's closing stock price on Friday. Blockbuster wants to combine the companies into a chain that would sell portable devices, DVDs and other content. Circuit City investors are understandably thrilled by the potential marriage. Shares of the company soared 28% today to $4.98. The electronics chain has been exploring sale possibilities, and this kind of premium is attractive. Blockbuster investors, on the other hand, are not happy: shares dropped nearly 11% today to $2.79.
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Posted
Apr 10 2008, 12:36 PM
by
Kim Peterson
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Blockbuster is feeling the love again in its love-hate relationship with the Internet, and this time I think the company is serious. The Hollywood Reporter says Blockbuster is making a set-top box for streaming movies to TVs, and could announce the service this month. The device would be tied to Movielink, the online movie service for PCs that Blockbuster bought last year. It's an ambitious move for a company that has never figured out the Internet. Blockbuster has bumbled around while Netflix, Amazon, Microsoft, TiVo and others found ways to marry video and the Web. Blockbuster went guns blazing after Netflix two years ago, pouring money into its DVD-by-mail service before deciding to pull back and retrench. Now, Blockbuster is making some smarter moves. For one thing, it's actually doing something with Movielink. And by offering a streaming box, it avoids the messy license and DRM issues that come with a downloading service. But Blockbuster faces some real problems, which may be why its stock price only rose less than 2% on the news today.
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Posted
Dec 21 2007, 03:15 AM
by
Kim Peterson
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Blockbuster continues to struggle with balancing its online rental plans with its more profitable in-store business. The company said yesterday it's raising prices for its Total Access subscription plans, and Citigroup analyst Tony Wible said he thinks half of the subscriber base will ditch. In a nutshell, the premium plan increases by a shocking $10 to $35 a month. That plan allows you to rent three DVDs at a time online with unlimited in-store trades. If you rent one DVD at a time, the price increases by $2 to $12 a month. The most popular plan, which gets you three DVDs at a time, will cost $21 a month. These plans let you rent DVDs online or at stores. To ease the pain, Blockbuster is cutting the monthly price of some of its by-mail plans by $1.
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Posted
Nov 02 2007, 04:11 AM
by
Kim Peterson
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This is how I picture board meetings at Blockbuster world headquarters. CEO Jim Keyes stands up and slams his hands on the table. "This Internet thing is killing us!" he shouts. "Come on, people, we need ideas!"
Silence. Crickets chirping.
If any company could pack the Internet up in a box and shove it on the garage shelf, it would be Blockbuster. Oh, for the days when it could zap you with late fees if you didn't have the movie back by 4 p.m. Or when it could charge you an arm and a leg for new releases. The company hasn't been able to handle the rise of online distribution or the Web-slash-mail delivery system that Netflix has pioneered.
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Posted
Oct 23 2007, 09:46 AM
by
Kim Peterson
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I love rooting for Netflix. One reason is that in five years of being a customer, I've never had a bad experience. But the bigger reason is that Netflix has doggedly pursued its business model to become a worthy rival to BOB, also known as Big Old Blockbuster. After losing ground to BOB this year, Netflix has regained its momentum.
The company surprised analysts last night with stronger-than-expected quarterly results and a 24% increase in subscribers, to 7 million. Its shares are up more than 9% today to above $25 as investors applaud the news.
Netflix's outlook seemed bleak three months ago, when the company missed revenue targets and had its first drop in subscriber numbers. BOB, meanwhile, said its online subscribers rose by 600,000 to 3.6 million. Netflix's share price dropped below the $16 mark in July in response.
Netflix has cut some subscription plans by $1 and reduced marketing costs to save money. A bit of a risky strategy, but one that seems to be paying off. Still, Netflix's position has always been volatile, and in the future the company faces increased competition from Amazon and others.
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