Blockbuster Releases Some Q4 Results Early To Quell Bankruptcy Rumors
This story was written by Rory Maher.
In an apparent effort to reassure investors, Blockbuster (NYSE: BBI) released some of its Q4 results todaytwo weeks ahead of schedule. The company said that sales in U.S. stores it had owned for more than a year increased 4.4 percent versus a decline of 0.9 percent during the same period in 2007. It said sales of games, game merchandise and consumer electronics has grown over 30 percent, while video rentals had dropped by 2.6 percent. The company also said that earnings-before-interest-taxes-depreciation-and-amortization (or EBITDA) for the full-year 2008 would be higher than its previous guidance of $300 million to $315 million, and that it was working to refinance or pay off debt that matures in August 2009.
Earlier this week, Blockbuster shares fell nearly 90 percent following reports that it had retained law firm Kirkland & Ellis to explore ways to resolve its debt due in August, including bankruptcy. The shares dropped from about $0.80 on Tuesday down to nearly zero, before rebounding to about $0.50 after Blockbuster confirmed that it had sought out Kirkland & Ellis but to talk about raising capital to refinance its debt not to discuss filing for bankruptcy.
Yesterday, the S&P stoked the rumor flames when it put the video giant's debt rating on review for a downgrade .
By Rory Maher