Blockbuster's Future Looks Dicey

In the fourth quarter, Blockbuster posted a loss of $1.19 billion, or $6.57 a share, vs. a profit of $30.7 million, or 17 cents a share, a year ago. Results included an impairment charge of $1.3 billion, or $6.89 a share. Excluding the charge, the movie renter earned $58 million, or 32 cents a share.

Although fourth-quarter revenue increased to $1.62 billion from $1.58 billion in the year-ago period, same-store sales were down 6.8% and core rental sales were lower by 1.3% from a year ago.

"It might be difficult for Blockbuster to compete on price with retailers," added Krutick.

Meanwhile, Blockbuster is late to the online DVD subscription business, following Netflix (NFLX Quote) and Wal-Mart (WMT Quote). Shares of Netflix were lately falling $2.66, or 3.5%, to $73.90, as investors continue to be wary of hefty Blockbuster's ability to make trouble for its rivals.

Other concerns for Blockbuster include video-on-demand and other technologies. "They will continually pose potential risks to Blockbuster's existing business," said Krutick.

Finally, the spinoff may be somewhat of a worry. "While an independent Blockbuster could pursue its own initiatives [potentially with a more leveraged balance sheet], we believe the loss of a deep-pocketed parent is a risk," said Krutick.