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Pastimes : Home on the range where the buffalo roam -- Ignore unavailable to you. Want to Upgrade?

To: CFA who wrote (13799)	9/9/2005 3:42:17 PM
From: CFA	Read Replies (1) \| Respond to of 13815

<<Loaded up even more today in the $6.50s and will continue adding on weakness.>> Well, I guess I'm going down with the BBI ship, as I loaded up even more today in the $5.90s. At this point, I hold over 15 thousand shares, at an average in the $6.70s. At times like these, it's important to spell out what can go right: (1) IMDB continues to signal a Q3 upside surprise. There's only 3.5 weeks left in the quarter. From the week ending 7/3/05 to the week ending 9/4/05, the Top 50 US Video Rentals generated revenue of $1.15 Billion, or $115.4 Million/week. This compares to $87.6 Million/week generated during Q2 2005 and $100 Million/week generated during Q3 2004. (2) Gaming revenue--which represents 20% of Blockbuster's total revenue--should increase with the Q4 launch of XBOX 360 and the Q1 2006 launch of Sony's new Playstation. (3) Online competitive climate has gotten much easier with the departure of Walmart, and Amazon continues to represent a likely partnership for Blockbuster Online. Given the duopoly market, both Blockbuster and Netflix should be able to operate profitably. (4) Because of piracy combined with a lackluster box office, there's talk of studios shortening the current 4-month gap between box office release and DVD release. Any shortening of this gap will benefit the rental market, as DVD rentals will be able to better leverage box office marketing. (5) Sales of new DVDs seem to be slowing. Purchasing a new DVD is a substitute for renting a DVD. At some point people will realize that they never watch their purchased DVDs and would have been better off renting or purchasing used via Blockbuster. (6) Blockbuster has much more financial flexibility than investors are currently giving it credit for. If it ever got into a cash crisis, Blockbuster could reinstate late-fees or even spin off Blockbuster Online. If Netflix's 3 Million subscribers are worth $1.2 Billion, then Blockbuster Online's 1 Million subscribers could probably fetch approx. $400 Million.