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EARNINGS ROUNDUP

Blockbuster swings to a profit

May 16, 2008|From Times Wire Services

Blockbuster Inc. posted a first-quarter profit Thursday after it cut advertising costs in half and raised prices.

Net income was $45.4 million, or 20 cents a share, compared with a loss of $49 million, or 27 cents, a year earlier, the Dallas-based company said.

Revenue decreased 5.4% to $1.39 billion because of the sale or closing of 412 company-operated sites, the retailer said. Blockbuster had 7,719 stores as of April 6.

Blockbuster expects to lower costs further if it succeeds in its plans to acquire Circuit City Stores Inc.

The video rental chain aims to save money by closing stores, cutting jobs and buying in bulk, Chief Executive James Keyes said in April. Thursday's earnings might help persuade skeptical investors to support the deal, said Arvind Bhatia, an analyst at Sterne Agee & Leach Inc. "You could make the argument that Jim Keyes has turned around Blockbuster," Bhatia said. "If that's doing well, that makes it somewhat easier for Jim Keyes to make the case" for the purchase.

Blockbuster shares fell 2 cents to $3.05.

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