Coinstar Shares Plummet Further on a Weak Q1 Outlook
Coinstar shares fell over 8 percent after-hours, following the company's earnings announcement. The problem: a much weaker-than-expected outlook for the first quarter.
Results were right in line with the lowered expectations the company issued on January 13. The stock plummeted about 25 percent back in January after the company warned that revenue, earnings, and the full-year outlook would all be much weaker than expected due to some mis-calculations in its Redbox DVD rental business.
Today Coinstar didn't adjust its full-year outlook, but it did provide EPS expectations for the first quarter that were much lower than expected.
Coinstar says GAAP EPS from continuing operations will come in between 15 cents and 25 cents on a fully diluted basis, while the average Thomson Reuters analyst estimate is 57 cents. Plus, this is a major drop from the prior two quarters: in the fourth quarter adjusted EPS came in at 68 cents and the prior quarter at 66 cents.
The problem: Redbox made some major miscalculations about its DVD inventory. The company purchased too many copies of certain discs and it hasn't adjusted well to the 28-day delay it's agreed to with Hollywood. (After studios put DVDs on sale, Redbox can't start renting the films for a dollar a day until 28 days have passed.)
Blu-Ray discs are drawing lower demand than Redbox had anticipated, the company saying it learned that "the demand curve is different" for the pricier discs.
Redbox didn't give any details on its long awaited streaming service. The company said last year it's planning to introduce a digital distribution service this year, but today all the company said is that it's "having detailed discussions with a number of partners."
Redbox would be jumping into competition with Netflix as well as Amazon , which currently offers digital video sales, and is reportedly working on a subscription streaming service.
The company said a test of video game rentals has been successful, and it'll soon make a decision about whether or not to roll out video games nation-wide.
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