Blockbuster ( BBI) rose 4% Wednesday after posting better-than-expected first-quarter earnings.

The big movie-rental chain, whose growth has been hampered by the onslaught of competition in the DVD business, posted a first-quarter profit of $113 million, or 62 cents a share. That's up from $81 million, or 45 cents a share, a year earlier. Revenue fell 1% from a year earlier to $1.5 billion.

Excluding a tax benefit, latest-quarter earnings were 41 cents a share, 3 cents ahead of the Wall Street analyst consensus estimate.

The report comes on the heels of parent Viacom's ( VIA.B) decision earlier this year to spin the Blockbuster unit off to shareholders. Viacom put Blockbuster on the block last year as the unit's results slumped, but the company failed to get its price in talks with prospective private-equity buyers.

"Our gross margin and profitability for the quarter continued to be strong, although our revenues were impacted by an extremely challenging environment, including a much lower box office and lighter-than-anticipated traffic industrywide," said CEO John Antioco.

"Importantly, we made significant progress with several key business initiatives and are on track for the national launch of our rental subscription programs, both in-store and online, the rollout of our movie trading initiative and the expansion of our store-in-store game concepts. We are making substantial investments in these programs this year and believe they position Blockbuster for future growth."

On Wednesday, Blockbuster rose 64 cents to $17.12.

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