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LOS ANGELES - Blockbuster, the US' No 1 movie rental company, today posted a narrower loss as it kept marketing costs low and squeezed higher revenues from lacklustre titles in its third quarter, sending its shares up nearly 9 per cent.
It was the first time in several quarters that Blockbuster beat Wall Street earnings expectations as its faced debt problems, an expensive battle over online rentals against Netflix Inc. and cooling store-based rentals.
"It's very mixed but generally positive," Wedbush Morgan analyst Michael Pachter said of the company's results.
"There is a bit of short covering going on and a relief rally that the rental industry isn't broken," Pachter said of the share price swing.
Pali Capital analyst Stacey Widlitz said it appears Blockbuster is taking market share from store-based rivals and was poised to make a run at Netflix with its Total Access plan, which allows online subscribers to swap movies at its stores.
"I think they are doing well. They are on the right track," Widlitz said.
The net loss slimmed to US$24.7 million ($37.2 million), or US15 cents per share, from US$491.4 million, or US$2.67 per share, a year earlier.
Revenues fell about 3 per cent to US$1.33 billion from US$1.37 billion due to store closures and a weak slate of movie titles.
The company's adjusted net loss came to 8 cents a share, compared with US14 cents a share a year earlier. Analysts on average expected a loss of US10 cents a share, according to Reuters Estimates.
Domestic same-store rental revenue rose 0.7 per cent, but were offset by a 7.5 per cent decline in international same store rental revenues.
Blockbuster derived about 68 per cent of its total revenues from in-store movie rentals in the third quarter and 6.5 per cent from online movie rentals, while game rentals accounted for 7.1 per cent. It also gets revenue from sales of previously viewed products.
Blockbuster Chief Executive John Antioco told Reuters on Thursday that, although the company was closing stores at a faster clip than rival Movie Gallery Inc., it had picked up "considerable share this year and I believe it will continue, if not accelerate, next year."
Blockbuster has closed a net 395 company-owned stores worldwide this year. It said on Thursday it had about 8500 stores worldwide.
He said the downturn in international rental revenue reflected the company's closure of its stores in Spain and competitive pressure in the United Kingdom, its largest overseas market.
"International has been a mixed bag for us for the last couple of years," Antioco said. "A very strong performance for us consistently was Canada. We didn't take out late fees internationally except in Canada."
Antioco said the Total Access programme, launched on Wednesday, and ramped up marketing would propel Blockbuster Online to its goal of signing up 2 million subscribers by year's end. Blockbuster Online had reached 1.5 million subscribers at the end of the third quarter.
"We are delighted with the first-day results. The sign-ups vis a vis last week's total are up by a multiple," he said.
Blockbuster shares were up US35 cents at US$4.35 in early afternoon trading on the New York Stock Exchange on Thursday. Blockbuster stock has traded between US$5.12 and US$3.19 in the past 52 weeks.
- REUTERS
