By : Erik Gruenwedel | Posted: 13 May 2009
egruenwedel@questex.com

On the eve of Blockbuster Inc.’s widely awaited first quarter financial results, Pali Capital analyst Stacey Widlitz said she expects the No. 1 DVD rental company to report a 3% decline in same-store rental revenue.

Widlitz, in a note, said retail comps would be in the mid-teens as Blockbuster decelerated retail initiatives to preserve its limited available cash.

Operating capital became a concern with the economic downturn and evaporating credit market.

Widlitz said Blockbuster’s previously announced pledge toward $200 million in cost cuts in 2009 would drive earnings. She added that the revised credit revolver included “simply punishing” payback terms that do not portend a rosy future.

“While we believe the company will have little problem meeting obligations this year, we are not confident 2010 will be the same story,” Widlitz said.
 

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