The chain reported a net loss of $491.4 million, or$2.67 per share, for the third quarter after taking ahit from non-cash charges of $459.1 million, or $2.50per share. Without the charges, which were related togoodwill from Viacom Inc.'s purchase of the company inthe mid-1990s, the chain's net loss was $24.6 million, or13 cents per share, which was inline with analystsestimates.
Blockbuster chairman and CEO John Antioco says thechain will cut costs by more than $100 million in 2006and $50 million in 2007 by reducing overhead andmarketing spending and by selling off noncore assetssuch as D.E.J. Productions Inc., a wholly ownedsubsidiary.
Moreover, Antioco said the chain would decrease itscapital expenditures to $90 million in 2006 from $140million this year. Specifically, Blockbuster will openfewer stores and will close under-performing units.
During the quarter, Blockbuster's US same-storerental revenue fell roughly 1%, according to executivevice president and CFO Larry Zine. He pointed outduring the chain's earning conference call that theindustry's rental revenue decline was nearly 12%,according to research firm Rentrak Corp.
"The results clearly demonstrate that Blockbuster ison the right track," Antioco said during the call,adding that the chain "outperformed the rentalindustry. Nonetheless, Blockbuster's totalthird-quarter revenue fell 1.7% to $1.39 billion from$1.41 billion for the third quarter of 2004.
Moreover, total worldwide same-store revenuesdecreased 3.8% from the same period last year, and the subscriber count for Blockbuster Online didn't grow and ended the quarter with about one million subscribers
Antioco said that Blockbuster will continue to focuson building its online business, as well as work togrow its market share.
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