Coinstar profit slips, shares clipped
The Bellevue company, owner of the Redbox DVD kiosks, posted lower fourth-quarter profit after losing customers, and said a weak film lineup this period will lead to results that miss analysts’ estimates. The stock tumbled.
Coinstar, owner of the Redbox DVD kiosks, posted lower fourth-quarter profit after losing customers, and said a weak film lineup this period will lead to results that miss analysts’ estimates.
The Bellevue company’s stock tumbled $4.52, or 8.7 percent, to $47.58 in after-hours trading Thursday, falling as low as $46.81. The shares added 1.5 percent to $52.10 at the close of the regular trading session, before its results were released.
Net income declined 27 percent to $22.9 million, or 75 cents a share, from $31.5 million, or $1, a year earlier, the company said. Sales, while rising 8.4 percent to $564.1 million, were below the $580.2 million average estimate, hurt by results from acquired kiosks.
Fewer new releases on DVD will diminish sales and profit this period, said Chief Financial Officer Scott Di Valerio. He said the company also needs to bring back customers who stopped renting during the third quarter, when content also was weak.
“It’s going to take a while with the third-quarter content, how bad it was, to get them back in,” said Di Valerio, who will become chief executive officer on April 1. “We saw some good trends in the fourth quarter, which was good, but also looking at the first quarter, some of the releases aren’t as good as they were last year.”
The company stocked 12 titles in January compared with 23 in January 2012, Di Valerio said.
Profit excluding some items this quarter will range from 77 cents a share to 92 cents, the company said, on sales of $568 million to $593 million. That’s below analysts’ projections for profit of $1.24 a share on revenue of $623.2 million.
“It’s a content question and a question of continuing to drive folks to our kiosks,” Di Valerio said. “We feel as we hit the back half of the year, we’ll be hitting on all cylinders and driving revenue per kiosks.”
In the fourth quarter, profit excluding some items was 93 cents. The company said lower revenue from dispensers acquired from NCR hurt results.
To lure customers back, Coinstar is refurbishing its kiosks to create space for an additional 80 disks on top of the 600 that machines now hold to give customers more choice. Typically, the 600 disks include about 100 different titles. At the current number, the company is often forced to remove popular titles to make room for newly released movies, Di Valerio said.
Coinstar is expanding beyond DVD rentals to include the Redbox Instant movie-streaming service, a joint venture with Verizon Communications, event ticket sales and Rubi, a coffee kiosk business. Redbox Instant, which will compete with Netflix and Amazon.com, is in public testing and is scheduled to officially open by the end of this quarter.
The venture said in January that it had signed up 10,000 users, and sees the potential for 35 million customers based on its research. The service combines Redbox kiosk discs with online rentals and a streaming library of movies that come with a monthly charge of $8 to $9 a month. The service said this week that it launched its app on Microsoft’s Xbox 360 console.