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Forecast: Blockbuster on the Upswing

20 Dec, 2007 By: Chris Tribbey

A Dec. 19 Blockbuster stock evaluation from U.S. Equity Research finds that despite the company's high debt, the emergence of video on demand, and the drop in stock value by 40% since October, the company could see a nice rebound in the coming months.

“We believe Blockbuster could be a beneficiary of its competitor's struggles as most of the planned Movie Gallery closings are assumed to be in very close proximity to Blockbuster's stores. In addition, should the Writer's Guild of America strike last an extended period of time, we believe consumers may turn to video rentals in order to satiate their TV entertainment needs,” the report reads.

While VOD will be a threat to the rental industry long-term, and the low price of DVDs makes buying instead of renting attractive, Blockbuster's Total Access service, new kiosk rental service and the proliferation of high-def players present plenty of opportunities for the company.

“We expect Blockbuster to end 2007 with roughly $5.4 billion in revenue, a 2% decline from 2006,” the report reads. “We believe that domestic movie rental revenue growth will continue to buoy weak international movie rental and worldwide game rental trends.”

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