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First Bubble To Pop? Coinstar Slashes Guidance On "Weak Video Title Performance"

Tyler Durden's picture




 

Who would have thought that such things as consumer wealth and cash actually matter for companies? After CSTR enjoyed a doubling of its stock price in the past year, it now appears many of these were based on the same thing that has driven the entire economy: hopium. The company has slashed Q4 revenue guidance from $415-440 to $391, and now sees EPS of $0.65 and $0.69 compared with guidance in the range of $0.79 to $0.85. Coming to pretty much every single consumer discretionary (ahem Netflix) stock near you.

Full press release:

BELLEVUE, Wash., Jan. 13, 2011 /PRNewswire/ -- Coinstar, Inc. (Nasdaq:CSTR - News) today announced certain preliminary financial results for the fourth quarter ended December 31, 2010. The company expects revenue for the fourth quarter of 2010 to increase 31% year over year to $391 million, compared with previous fourth quarter 2010 guidance in the range of $415 million to $440 million.

The
company expected stronger performance from the titles scheduled for
release during the 2010 fourth quarter holiday season, particularly from
the slate of 28-day delay and higher-priced Blu-ray™ titles, despite a
16% lower box office for scheduled releases compared with those in
fourth quarter 2009
. In addition, in anticipation of demand for new
releases that did not materialize, redbox removed older inventory early, impacting revenue and gross margin. Further, redbox
consumers utilized "rent and return anywhere" to a higher level than
expected, which caused temporary imbalances in available titles across
the kiosk network.

As a result, the company expects fourth quarter 2010 GAAP earnings per share (EPS) from continuing operations between $0.65 and $0.69 on a fully diluted basis, compared with guidance in the range of $0.79 to $0.85. GAAP EPS includes a reduction of $0.02
per share due to the expected increase in diluted share count of 1.3
million as a result of convertible debt and option exercise dilution and
$0.02 per share due to expected higher share based expense related to the higher share price at the end of the quarter.  

Paul Davis, chief executive officer of Coinstar, Inc., said, "Overall, the performance of the redbox business during the fourth quarter was not in line with our forecast. This was redbox's
first holiday season with 28-day delayed titles, and we underestimated
the impact that the delay would have on demand during the fourth
quarter. We also expected much better performance from Blu-ray and had
purchased to a higher level of demand. While consumer visits to the
kiosks remained strong, the number of movies per visit, or basket size,
was lower than planned. We have already taken a number of decisive steps
to better align content purchases with our consumers' behavior,
including offering more day and date titles and better allocating
Blu-ray titles to high demand areas. In addition, since inventory
migration reflects the popularity of our rent and return anywhere
capability, we have made adjustments in our field processes to minimize
the impact of higher levels of migration on overall rentals. While some
measures such as changes in purchasing take longer to impact financial
performance, early results give us confidence that we have begun taking
the right steps to address these issues and position the business for
further success, which we will discuss further on our earnings call on February 3.

"Nevertheless, redbox revenue grew 38% year over year in the fourth quarter," Davis continued. "Consumer demand for redbox DVD rentals continues to be robust, and consumers and retailers appreciate the value and convenience offered by redbox.
Consumers rented over 144 million movies during the quarter and same
store sales increased 12.5% year over year in the fourth quarter. Our
unit economics for single and dual kiosks remain strong, and we believe
in the future prospects for DVD kiosk rentals. Additionally, we are
pleased with the continued strong performance of our coin business,
especially its year over year 10% growth in same store sales during the
fourth quarter, and remain focused on driving profitable growth across
the organization."

The company expects fourth quarter adjusted EBITDA from continuing operations between $78 million and $82 million, a year over year increase of 38.8% to 45.9%, compared with guidance in the range of $84 million to $90 million. EBITDA was impacted by lower revenue and gross margin.  

Coinstar also has revised its initial outlook for full year 2011 and now expects revenue between $1.70 billion and $1.85 billion, adjusted EBITDA from continuing operations between $325 million and $355 million, and GAAP EPS from continuing operations between $2.60 and $3.10, based on a share count of 33.3 million.  

The
results provided in this press release are preliminary and subject to
completion and review of the 2010 financial statements by the company as
well as review by the company's independent auditors and Audit
Committee.  

Coinstar plans to report final results for the 2010 fourth quarter and full year on February 3, 2011, after the market close. Management will host a conference call that day at 2:00 p.m. PST (5:00 p.m. EST)
to review the results in more detail and discuss 2011 guidance. The
conference call will be webcast live and archived on the Investor
Relations section of Coinstar's website at www.coinstar.com. A recording of the call will be available approximately two hours after the call ends through February 17, 2011, at 1-888-286-8010 or 1-617-801-6888, passcode 42299302. 

 

 

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Thu, 01/13/2011 - 17:45 | 874422 Rogerwilco
Rogerwilco's picture

This mirrors the trouble theaters are having. Punk-ass kids don't watch anything that lasts longer than 30 minutes or costs more than free.

Thu, 01/13/2011 - 17:48 | 874434 mynhair
mynhair's picture

Huh?  Thought they just took 20% of the couch change you dumped in them machines.....

NFLX is a better business model anyway.   /s

Thu, 01/13/2011 - 22:44 | 875176 Id fight Gandhi
Id fight Gandhi's picture

Netflix had it's run. It's done.

They need to renegociate with studios and they don't like losing blu ray and DVD sales.

Plus a whole buncha others online wanna sell streaming.

Thu, 01/13/2011 - 17:48 | 874436 Bruno the Bear
Bruno the Bear's picture
N.J. cuts bond sale after Gov. utters 'bankrupt'

 

Health care spending “will bankrupt” the state unless it requires workers to pay more for medical coverage, Mr. Christie said. New Jersey will spend $4.3 billion on health insurance this year, and that cost will rise 40% within four years, Mr. Christie, a first-term Republican, said at the town-hall meeting.

“Mr. Christie made a rookie mistake,” Mr. Pietronico said. “The market is very sensitive to the word ‘bankrupt.'”

 

LOL at that last line!!

http://www.crainsnewyork.com/article/20110113/FREE/110119920#

 

Thu, 01/13/2011 - 17:50 | 874445 mynhair
mynhair's picture

If only he would BK that POS state, so a good comparison with LiberalLand IL can be made.

Thu, 01/13/2011 - 18:15 | 874538 Pure Evil
Pure Evil's picture

NJ's not bankrupt, the politicos in Trenton just haven't figured out a way to rob it's taxpaying citizens blind.

Oh well, IL is now the shining light on the hill.

Thu, 01/13/2011 - 18:00 | 874467 iDealMeat
iDealMeat's picture

They should put a little better technology in they're sorters. Check the coin dates and pull the silver..  and the copper..

 

 

Thu, 01/13/2011 - 18:00 | 874486 A Nanny Moose
A Nanny Moose's picture

My thoughts exactly. One would think there is an untapped silver/copper mine in that model.

Thu, 01/13/2011 - 17:59 | 874482 whatz that smell
whatz that smell's picture

wasn't bubbles prez ronnie reagan's pet chimp? it's a sin, ye fornicators!

Thu, 01/13/2011 - 18:02 | 874492 spartan117
spartan117's picture

Quick, someone wake RoboTrader up.  He needs to put up some nudy charts.

Thu, 01/13/2011 - 18:08 | 874516 Pure Evil
Pure Evil's picture

"I'll buy that for a dollar!"

 

RoboCop.

Thu, 01/13/2011 - 18:08 | 874514 Pure Evil
Pure Evil's picture

Is hopium the same as helium, because if it is, then its up and away.

 

If it's more like hydrogen, then I hopium nopium strikes a match.

Thu, 01/13/2011 - 18:09 | 874521 Xibalba
Xibalba's picture

If only those machines took foodstamps!   Earnings would've crushed.....

Thu, 01/13/2011 - 18:09 | 874522 Rockfish
Rockfish's picture

Redbox best deal for us 80 percenters.

Thu, 01/13/2011 - 18:14 | 874535 HarryWanger
HarryWanger's picture

Wouldn't call a terrible business model like CSTR a barometer for anything. Probably dying because people are flocking to AppleTV and streaming Netflix. Seems like another great indicator for those two stocks.

Thu, 01/13/2011 - 18:25 | 874568 the rookie cynic
the rookie cynic's picture

How 'bout ROVI? http://read.bi/evVCrW A way to play all of the above?

Thu, 01/13/2011 - 19:14 | 874711 hack3434
hack3434's picture

Sure Harry...I'm sure 92 million pirate dowloads for the top 10 alone didn't have anything to do with it. Bottom line is that Apple and Netflix WILL get hurt by piracy. 

Thu, 01/13/2011 - 20:28 | 874905 onlymyopinion
onlymyopinion's picture

I'll second that Harry.  IIRC Read sometime back during the recession 2 years ago, people were spending all their loose change rather than stuffing it in their home piggy banks which probably benefited CSTR. There was an over abundance of coins being cashed in.  It would seem logical that 18 months into recovery, folks are back to keeping their coins at home and don't need to spend every nickle & dime.  JMVHO

Fri, 01/14/2011 - 01:45 | 875422 cclaeys
cclaeys's picture

Harry's beastiality films have finally taken hold - go get em Mr Hands. Or even more likely, they are all busy with their kindle and iphone book readers, nobody watches television, its all about the books.

Thu, 01/13/2011 - 18:22 | 874559 SAME AS IT EVER WAS
SAME AS IT EVER WAS's picture

I can hear Bennys "battle bots" gearing up to take care of this pesky dip.

Thu, 01/13/2011 - 18:29 | 874583 TonyV
TonyV's picture

It costs $7/month to stream as much as you want from Netflix. Coinstar $1/movie. You do the math.

Fri, 01/14/2011 - 01:46 | 875424 cclaeys
cclaeys's picture

who the fuck has actually been a nflx member for a month, I ran out of shit to watch after about a week.

Thu, 01/13/2011 - 19:11 | 874715 Hollow_Point
Hollow_Point's picture

AH $42.46 -14.21, and the PE is still 42.69.

Thu, 01/13/2011 - 19:13 | 874728 trav7777
trav7777's picture

well the studios up and FUCKED redbox; it's as simple as that.

They didn't want anyone selling their titles for less than the MASSIVE prices that the studios believe their derivative, trite, hackneyed, monotonous, unimaginative, formulaic dogshit is worth.

I mean, seriously, HOW MANY fucking stupid comedies with the same mfin plot can Adam Sandler's little yid ass be in where he magically gets a supersmokin hot blonde nordic girl?

Thu, 01/13/2011 - 19:54 | 874815 Hephasteus
Hephasteus's picture

Get your entertainment from the ordinary people.

http://www.youtube.com/watch?v=lj-x9ygQEGA&feature=related

Thu, 01/13/2011 - 20:46 | 874958 Buck Johnson
Buck Johnson's picture

Spot on, spot on.  The studios truly think that they can command and control how much money people will pay for their movies and services.  When you can go and see the same movies and series online for free.  And oh yea Adam Sandler keeps the same formula for his plotted movies.  For once I would like to see him change up, grow up and actually do a serious movie or another plot.

Fri, 01/14/2011 - 00:22 | 875320 blunderdog
blunderdog's picture

Punch Drunk Love was definitely different, but it didn't do so hot.  Sandler doesn't deserve the credit for the creativity, but why fault him for sticking with what works?

Fri, 01/14/2011 - 03:02 | 875467 bunkermeatheadp...
bunkermeatheadprogeny's picture

Isn't it funny how often the male yid gets the nordic girl in tons of comedies and coming of age teen movies.

Guess the model of male nordic getting female yid just wouldn't sell movies.

Thu, 01/13/2011 - 20:14 | 874856 asteroids
asteroids's picture

God bless them they use GAAP instead of mark to myth accounting.

Thu, 01/13/2011 - 22:42 | 875173 DoctoRx
DoctoRx's picture

If they ring a bell at the top and no one listens . . .

Fri, 01/14/2011 - 00:07 | 875298 Client 9
Client 9's picture

Second bubble to pop is (fool's) gold.

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