returned to profit in the fourth quarter, beating analysts' expectations, as the home entertainment company continued to reshape its business to compete in the digital age.
Net income was $0.9 million, or zero cents a share, compared with a net loss of $1.19 billion, or $6.57 a share, a year ago.
Excluding items, net income was $12.3 million, or 7 cents a share, down almost 79% from the $58.0 million, or 32 cents a share, the company earned in the year-ago period. Revenue increased 6.3% to $1.72 billion.
Analysts expected earnings of 4 cents a share on revenue of $1.63 billion.
"During 2004, Blockbuster invested in new customer propositions designed to improve our competitive position in the home entertainment marketplace and strengthen our future revenues and profits," the company said.
Blockbuster more than halved operating expenses, which were $933.0 million vs. $2.12 billion in the year-ago period, which was marked by asset impairment and other charges.
The company singled out the growth of its online business -- launched to challenge industry-leader
-- and the success of its decision to end conventional late fees on rentals. The online service now has more than 750,000 subscribers; with "accelerated investment," the company hopes to have more than 2 million subscribers by the first quarter of 2006. Traditional video rentals have been in a prolonged slump.
Blockbuster also extended its $14.50-a-share hostile takeover offer for
. The offer -- comprised of $11.50 in cash and $3.00 in Blockbuster class A common stock -- was previously scheduled to expire at midnight EST, March 11, but has been extended until midnight EST, March 24.
Blockbuster shares rose 10 cents to $8.72 Tuesday.