Trouble ahead: Blockbuster posts $435 million loss
Video rental service just can't seem to come up for air. The company announces that it lost $435 million in the fourth quarter--usually its best months of the year.
The hard times just keep slapping Blockbuster. The company announced Wednesday that it posted a $435 million loss for the fourth quarter.
The poor performance is especially hard, considering it happened in the fourth quarter--usually Blockbuster's best months. In the third quarter, the company lost over $114 million.
Back in September, the company announced that it would be closing up to 960 underperforming stores to increase its earnings by $50 million to $60 million. Blockbuster closed 374 U.S. stores last year and plans to accelerate its plans to shutter an additional 545 retail locations this year.
To revitalize its business, Blockbuster hopes to install 7,000 rental kiosks this year to help it more effectively compete with Redbox. It installed 2,000 kiosks in 2009.
But Redbox isn't Blockbuster's only issue. The company is being hit from all sides. Netflix continues to dominate the mail-rental business. And as more people download films via video-on-demand services or stores like iTunes, Blockbuster's core business is being further eroded.
Blockbuster competitor Movie Gallery, which owns Hollywood Video retail stores, filed for Chapter 11 bankruptcy earlier this month, after succumbing to many of the same market factors.
Going forward, Blockbuster's future is decidedly in doubt. Blockbuster CEO Jim Keyes said Wednesday in a statement that although he believes his company's "future is bright, the next 12 to 18 months will remain challenging."
Investors apparently agree. Blockbuster's share price is currently hovering at 30 cents. Netflix's share price is around $64.
Correction at 10:30 a.m. PST: Due to an editor's error, Blockbuster's stock price was listed as 10 cents lower than it currently is trading at..