Chart wise - this is classic 'filling the gap' action. Ouch.
- Coinstar Inc, operator of Redbox DVD vending machines, fell the most since July 2003 after preliminary fourth-quarter sales and profit missed projections because of delayed access to Hollywood’s newest movies.
- The company has agreed to a 28-day delay in receiving the latest DVD releases from Hollywood, giving studios a four-week window to sell their latest movies before offering them for rental in Redbox kiosks.
- The delay requires management to do a better job of selecting titles to keep customers renting while they wait for newer releases, said Eric Wold, an analyst at Merriman Curhan Ford & Co. in New York. “They made the wrong decisions on what titles to stock,” said Wold, who rates the shares “buy” and doesn’t own them. “There’s a learning process.”
- The company, which has taken sales from traditional retailers such as Blockbuster, previously exceeded analysts’ net-income estimates for eight straight quarters.
- “We underestimated the impact that the delay would have on demand during the fourth quarter,” Chief Executive Officer Paul Davis said in the statement. “We also expected much better performance from Blu-ray.”
- Fourth-quarter profit was 65 cents to 69 cents a share, excluding some items, compared with previous company projections of 79 cents to 85 cents, according to the statement. Sales rose 31 percent to $391 million, missing forecasts of $415 million to $440 million.
- Analysts had predicted profit of 86 cents a share, the average of seven estimates. They projected sales of $426.1 million, the average of 14 estimates.