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Blockbuster Express Widens Q2 Operating Loss

25 Jul, 2011 By: Erik Gruenwedel

Owner NCR Corp. says it has several unnamed third parties interested in the disc rental business

NCR Corp. reported a $17 million second-quarter (ended June 30) operating loss for its Blockbuster Express kiosk movie rental business, a 70% increase from the $10 million operating loss during the previous-year period.

Duluth, Ga.-based NCR Corp. owns and operates nearly 10,000 Express kiosks through a license agreement with Blockbuster LLC, which is owned by Dish Network Corp.

NCR attributed the loss to the rollout of 700 Express kiosks in the quarter, which brought the install base to more than 9,600 units nationwide — 1,600 kiosks more than at the end of 2010. Notably, 800 of the new kiosks included supplanted a Redbox vending contract with Food Lion grocery stores across 11 states in the Southeast and mid-Atlantic regions.

Express revenue grew 65% to $38 million from $23 million last year.

John Bruno, EVP of industry solutions group at NCR, said the company continues to redeploy underperforming Express units to other store locations. He said installation of more than 200 Express kiosks at Delhaize America supermarkets included redeployed units.

“The kiosk rental market is truly about consumer choice and expanding access to quality content, be it at $1 rental or premium price access to new releases, whatever the customer chooses,” Bruno said in a July 21 call with analysts. “We remain excited about the progress we are making in our entertainment business.”

CEO Bill Nuti said he believes Express kiosks will become profitable in 2012, underscoring why the company is exploring acquisition interest in the business. NCR believes the Express business can grow revenue from 10% to 15%.

“At the end of the day, we're going to do what's in the best interest of the shareholder,” Nuti said, “and analyze any external offer, partnership or acquisition, as well as internally, what we think we can return to the shareholders over a reasonable amount of time, running this business as part of NCR.”

Overall, NCR reported net income of $35 million, up nearly 13% from net income of $31 million last year, on revenue of more than $1.3 billion. The company reported revenue of more than $1.1 billion during the same period last year.


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