Coinstar 2Q Profit, 2011 Sales Forecast Beat Estimates on Redbox Success
Coinstar Inc. (CSTR), parent of Redbox self-service DVD-rental machines, said second-quarter profit fell less than analysts expected and forecast that 2011 sales would exceed analysts' estimates. The company's shares surged on the news, in extended trading.
Net income fell 53% to $19.5 million, or 60 cents a share, from $41.4 million, or $1.34, a year earlier, Coinstar said Thursday. Excluding a year-earlier gain from discontinued operations, profit almost doubled as revenue surged 42% to $380.2 million. Coinstar was expected to earn 50 cents a share on $381.8 million in revenue, the average analyst estimates in a Thomson Reuters poll.
The company, whose Redbox division is the largest U.S. operator of self-service DVD-rental machines, has progressively boosted revenue from packaged media as many other media distributors, such as Netflix Inc. (NFLX), have moved toward digital distribution. Along the way, Redbox has increased profitability from each of its machines. While Coinstar expanded its Redbox count 38% from a year earlier, to 28,500 units, revenue from DVD rentals jumped 54% while operating income almost doubled, Coinstar said Thursday.
Last week, Netflix said it boosted third-quarter profit by 26% on a 31% surge in revenue as the largest U.S. DVD-by-mail service boosted subscribers by expanding its digital and packaged-media offerings.
Both Netflix and Coinstar have likely hastened the demise of video chain-store operator Blockbuster Inc., which last month filed Chapter 11 as part of a plan to slash the company's debt from almost $1 billion to an estimated $100 million.
Coinstar on Thursday also forecast 2010 and 2011 revenue ranges with midpoints of $1.47 billion and $1.88 billion, respectively. Analysts have forecast sales of $1.47 billion and $1.80 billion, respectively.
Coinstar shares jumped 14% to $53 at 4:30 p.m. Eastern time after advancing 1.4% in regular trading Thursday.