Redbox parent company Coinstar released its fourth quarter earnings today, and it looks like it may want to pick up a pint of ice cream and a movie to watch tonight to forget this day happened.
Despite enjoying its first annual revenue amount of more than $2 billion, the fourth quarter was far from being a help to Coinstar. Net income declined from the fourth quarter of 2011's $31.5 million, or $1 a share, by 27 percent to land at $22.9 million, or 75 cents a share. Overall sales rose 8.4 percent to $564.1 million, but was well below the estimate of $580.2 million.
Several issues appear to have contributed to the issues the company faced. The kiosks acquired from Blockbuster last February are not performing well was definitely high on the list, followed by a lack of content to put in the machines. During Jan. 2012 Redbox has 23 new films to place in its kiosks, but that number dropped to a mere 12 this year. Perhaps it's time to rethink that rental window agreement the company has with studios such as Warner Brothers.
Lastly, according to Bloomberg, the company is going to be increasing the capacity of its machines from 600 discs to 680. Due to the current capacity, popular films quite often have to be removed to make room for new releases. Each kiosk usually stocks around 100 titles, and this new capacity will allow popular films to hang around for just a little bit longer.
The future may be a bit brighter with Redbox Instant currently being tested, the addition of ticket sales and an expansion into coffee kiosks, but that isn't stopping the stock from taking a significant drop in after hours trading.
Considering how Redbox has been helping the demise of video rental stores, you would think it's on top of the world, but obviously some more work to be done.
Coinstar, Inc. Announces 2012 Fourth Quarter And Full Year Results |
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BELLEVUE, Wash.,Feb. 7, 2013/PRNewswire/ — Coinstar, Inc.(Nasdaq: CSTR) today announced financial results for the fourth quarter and full year endedDecember 31, 2012.
"We are pleased with our performance in 2012, which drove annual revenue of more than$2 billionfor the first time," saidPaul Davis, chief executive officer ofCoinstar, Inc."Our ongoing commitment to creating value for our consumers, our partners and, ultimately, our shareholders drove substantial progress on several growth initiatives that we outlined at the beginning of 2012, including Redbox Instant byVerizon, the launch of the Redbox Tickets pilot, Rubi coffee kiosks and our expansion intoCanada. We made strategic investments across our business this year that we believe will generate new opportunities for growth as we move through 2013 and beyond."
Financial highlights for the 2012 fourth quarter and full year included:
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