This is great (IPO).
Blockbuster is no longer hidden behind Viacom. Now, we get to see how well Blockbuster is really managed. Once they start revealing their special deals, their amortization methods, etc. in their 10-K things will become very interesting. There could be lawsuits even new accounting pronouncements on inventory amortization of video inventory.
If you have ever looked at the other publicly traded video specialty chains, you will know that this industry makes a lot of cash and almost no profit (less than 5%) and many are operating at a lost (see below). I'm sure that doesn't make the IRS happy.
So, for me it is interesting. I have never bought a stock because of how much cash it is able to accumulate. I usually look at net income. What about you?
With all of that cash the video specialty chains could invest it other companies and become diverse, but that is not happening. Okay, Hollywood Entertainment is diversifying a little. However, the trend has been to buy up smaller video store chains, make more cash, and avoid taxes by not investing in more profitable businesses.
Right now these are the other publicly traded Video Specialty Chains:
Hollywood Entertainment (HLYW)
Movie Gallery Inc. (MOVI)
Video City, Inc. (VDCT)
Video Update, Inc. (VUPD, VUPDA)
West Coast Entertainment (WCEC)
Blowout Entertainment,Inc (BLWT, BLWTQ)
This is a Major Player in the Video Industry:
Rentrak Corporation (RENT)
This company is constantly suing the video specialty chains and video stores owners. There are other major players in the industry that we will talk about in the near future.
I spent six months analyzing this market and I look forward to interesting discussions with you about Blockbuster and the industry.
In the next few months we will discuss anything from Rentrak to buy-back prgrams to studio programs to SuperComm to DVD to e-tailing.
I will introduce you to informative web sites and links so that you may do your own DD. And by all means, feel free to take over the discussion/conversation and teach me something about the industry and Blockbuster. I may have a headstart, but I don't know everything.
Good luck with your investment decision.
Walter Morton |
