Coinstar Keeps Up With Netflix

Coinstar is rallying Friday morning, as third-quarter earnings tops estimates.
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) --


(CSTR) - Get Report

stock is surging, as the operator of Redbox DVD kiosks reports earnings that easily top expectations.

While net income dropped more than 50%, adjusted earnings of 66 cents a share were significantly better than forecasts of 50 cents.

Revenue surged 42% to $380.2 million from $267.7 million the year prior, driven by growth in its DVD business, which climbed 54.2%. Coin revenue increased at a much smaller 7.3%.

Looking ahead, Coinstar forecasts fourth-quarter earnings in the range of 79 cents to 85 cents a share, on revenue of $415 million to $440 million. Analysts are calling for a profit of 76 cents a share on revenue of $422.9 million.

For the full-year, Coinstar predicts earnings between $2.14 to $2.20 a share and revenue of $1.46 billion to $1.49 billion.

Coinstar also provided an outlook for 2011, saying earnings will range from $3 to $3.50 on revenue between $1.8 billion and $1.95 billion.

Shares of Coinstar are spiking 22.2% to $56.64 in morning trading.

This comes after last week rival


(NFLX) - Get Report

also reported a blockbuster quarter. While earnings missed estimates, investors were wooed by the company's ability to grow its subscriber base by record numbers. Netflix gained 1.9 million new customers in the third quarter, a 90% surge from a little over 1 million new users in the second quarter. This marked the fourth consecutive quarter of more than 1 million new subscribers.

The company also upped its forecast for subscriber growth, and is now expecting between 19 million and 19.7 million subscribers by the end of the year, compared with a prior guidance of 17.7 million to 18.5 million.

Netflix has declared that is moving from a DVD-by-mail company to a streaming company. And it looks like Coinstar could be making similar moves.


Los Angeles Times

reported that Coinstar plans to embark on Web streaming in 2011, with plans to offer monthly subscriptions similar to Netflix.

--Written by Jeanine Poggi in New York.

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