18acastra: Seems like every time I argue contrary to you, I lose. (Both the argument and money -g-.) But I won't stop now -g-. Since I'm a buyer of Midway Games (MWY) whose products are offered in Blockbuster stores, I obviously would pick Blockbuster as my company vis-a-vis Hollywood.
Nevertheless, I don't see any of these video rental chains as having such great economics. If Hollywood can generate great ROI's it certainly isn't reflected in the stock's financials that I see. Maybe because they keep putting the money into new stores that aren't so profitable for a while. Great. Just what I need in my neighborhood --yet another store that has the same titles as most all of the other ones. I assume that's where the stores are going--cities where the people already are. Country folk being tied into satellite so they don't have to make the trip into town I'd think. And looks like my cable operator is trying lots of things to get me to pay-per-view (like pay once and get to view it all day.) That pressure can only increase IMO. (When will play-on-demand show up?)
How about Albertson's? If it's about revenue sharing (and that rev.sharing co. takes its cut and in effect maybe has the pricing control), should be easy for any of them, Am. Stores, Long's, etc. etc. to do a deal with that company. (Forgot the name of the company that started the rev. sh deals, but it is publicly traded.)
In Texas, I could rent videos out of my local Kroger. I don't know Albertson's or what they've got... but if the business is so darn good - Albertson's, et. al. would have brains, space, inventory control, and checkout people just awaiting to scan popcorn, pretzels and videos.
When these stocks dropped a year or so ago, the managements stated (I seem to recall) something about dearth of hit films to carry over to video). Great profits with Jerry McGuire apparently changed that.
So taking all this together I have to laugh when I see projections of profitability FOUR years out. Yeah, sure. And if things indeed don't go right, I cannot see where there's a margin of safety now in HLWY, or even VUPDA (even if its bus model or share-of-market is way different.)
But as I say, I've been wrong many, many times- and you have been right on your detailed analyses in the past (again as I remember), so you might be right here too. And I'd certainly just like my share of traffic into Blockbuster for potential MWY rentals.
Paul Senior |
