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Earnings Rise 25% at Blockbuster

Paula Lacê

Blockbuster's(BBI Quote) third-quarter earnings topped analysts' estimates, despite weaker revenue amid fierce competition in the movie-rental business.

The world's largest DVD and video game rental chain said cost-cutting helped it post a 25% rise in profit. Net income increased to $63.7 million, or 35 cents a share, from $51 million, or 28 cents a share, in the previous year. That beat Wall Street earnings forecasts of 32 cents a share, according to Thomson First Call.

Revenue dropped to $1.38 billion from $1.39 billion in the year-ago period. Wall Street had expected a rise to $1.47 billion. Rental revenue decreased 2.4% to $1.10 billion, compared with $1.12 billion in the previous year. Same-store sales fell 7.5% worldwide.

"Same-store revenues declined as a result of our reduction of low margin, traffic-driving transactions and lighter than anticipated rental activity industrywide," said Chief Executive John Antioco. But he added: "We remain on track to deliver strong earnings growth for the year and in the future."

Blockbuster forecast full-year 2003 earnings to rise more than 35% to about $1.40 per share, from $1.04 a share in the same period a year earlier. Analysts expect the company to earn $1.44 per share this year.

Shares of the company were flat at $21.51 ahead of the opening bell Tuesday.