Blockbuster Loss Grows as Sales Drop

LOS ANGELES (Reuters) - Blockbuster Inc , the largest U.S. movie rental chain, posted a larger-than-expected quarterly loss as revenue fell more than 20 percent, and its shares dropped 12 percent in after-hours trade.

Blockbuster spent the better part of the year in a round of capital raising and debt refinancing to alleviate a cash-flow crunch and is turning its attention to growth in the fourth quarter, Chairman and Chief Executive Jim Keyes told analysts.

Keyes reiterated that the company would stay focused on its stores and asked analysts for patience while new revenue sources, including rental kiosks, games-by-mail and on-demand rentals, take hold. None were expected to generate material revenue for months, Keyes said.

"These things are going to take awhile. These things are basically on trial purposes," Keyes said on a conference call regarding on-demand sales through TiVo. "Give us time. Sorry I can't give you much color."

Keyes attributed a 14.4 decline in quarterly same-store sales -- double what many analysts were expecting -- to a smaller inventory of available titles at Blockbuster stores, a weaker slate of movies in the quarter, the global recession and a rise in theater attendance.

Wedbush Morgan analyst Edward Woo said that the company's poor results were due partly to light inventory at its stores but also continued competition from Coinstar's Redbox kiosks and online renter Netflix Inc . Netflix has grown subscribers steadily in 2009, and its shares have jumped from a low last November of $18.23 to $58.19 on Thursday.

Blockbuster's shares have lost more than 50 percent of their value since hitting a year-high of $1.70 per share in January 2009.

"Netflix is growing really well in a bad economy -- the same economy Blockbuster is facing," Woo said. "You have to wonder how much more patience investors will have."

Blockbuster reported a net loss of $116.8 million, or 60 cents per share, compared with a loss of $17.8 million, or 9 cents per share, a year earlier.