Outerwall Rings in NASDAQ, Acquires ecoATM2 Jul, 2013 By: Chris Tribbey
Redbox parent Outerwall — formerly Coinstar — celebrated its new company name July 2, ringing the opening bell at the NASDAQ stock exchange during its first day of trading under its new name and ticker symbol (OUTR).
“Our transition to Outerwall signifies the company’s next chapter as we continue to push the walls of retail out to bring new and inventive solutions to consumers,” CEO J. Scott Di Valerio said of the name change, which was approved by stockholders June 27. “We are enthusiastic about the future and committed to building on our existing brands, Redbox entertainment and Coinstar money services, as well as uncovering the next idea that will create a better everyday for our consumers, retailers and partners.”
However, Michael Pachter, analyst with Wedbush Securities in Los Angeles, expressed disappointment with the new name, suggesting the company should have changed its name to what brings in the most profit: Redbox.
“We are not encouraged by the change to Outerwall, as we think that the new name reinforces management’s intention to grow the company by introducing new lines of business,” he wrote in a note to investors. “Instead, we think that most investors prefer the company to sell its coin business, retire all debt, buy back convertible shares, and rename the business as Redbox.”
More than 30 employees, including Di Valerio, were on hand for the opening bell event in New York City.
Outerwall also used the occasion to announce the acquisition of San Diego-based self-serve kiosk company ecoATM, for $350 million in cash. Outerwall already has a 23% ownership stake in the company, bringing its total net cash payment to about $270 million.
Pachter estimated ecoATM brings in approximately $100 million in sales annually from 500 kiosks, and that the company has the potential to double its sales over the next two years.
The ecoATM acquisition is expected to close during the third quarter this year and will give Outerwall full ownership of the first company to offer cash for consumers' used mobile phones, tablets and MP3 players via kiosks. The kiosks use technology that allows customers to sell used electronics, based on the highest price ecoATM finds in worldwide secondary markets.
“With ecoATM, Outerwall will advance its evolution into multiple automated retail businesses and increase our exposure to the growing demand for refurbished products and mobile devices across the globe,” Di Valerio said. “As evidenced by our growing investment in ecoATM over the last four years, we are confident that ecoATM’s innovative, environmentally minded business model will continue to resonate with today’s technology savvy consumers.”