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NCR Exploring ‘Options’ for Blockbuster Express Including Sale

27 Oct, 2011 By: Erik Gruenwedel

Revenue for Express kiosk business tops $42 million — up 45% from revenue of $29 million last year; $13 million operating loss mirrors previous-year results

NCR Corp. Oct. 27 said it continues to pursue “strategic alternatives” for its Blockbuster Express kiosk business, which include selling the brand.

Duluth, Ga.-based NCR owns and operates about 10,000 Blockbuster Express kiosks through a license agreement with Blockbuster LLC.

In an analyst call to discuss NCR’s third quarter results, John Bruno, EVP, industry solutions group, said the ATM manufacturer is engaged in discussions with unnamed third parties regarding “meaningful options” for Express without elaborating.

Bruno said those discussions would not interfere with ongoing Express operations, which generated a 21% increase in same-store (kiosk) sales across an install base of 10,000 kiosks. Bruno said Express kiosks posted break-even pre-tax earnings.

“We continue to focus on consumer choice and expanding access to quality content,” Bruno said.

During the call word spread that rival Coinstar was upping the daily DVD rental rate at its Redbox kiosks 20% to $1.20. NCR CEO Bill Nuti said the price increase — and fourth-quarter release slate — could be “extremely helpful” to the Express business going forward.

“The industry is beginning to get pricing right,” Nuti said.

That said, the CEO cautioned that he would prefer NCR focus its capital and energy on core ATM banking and hospitality businesses — areas that produced record business for NCR in the quarter.

During the quarter, NCR finished rollout of its planned Express install base, including 500 kiosks in different markets. The company is also redeploying 1,600 underperforming kiosks, including 200 units in the quarter.

Nonetheless, Express posted a $13 million operating loss, which was identical to the loss reported during the same period last year. Indeed, Bruno said the Express business would post an operating loss of $60 million for the fiscal year.

Express kiosks generated $42 million in revenue, up 45% from revenue of $29 million during the previous-year period. NCR attributed the operating loss to kiosk depreciation and amortization of DVD/Blu-ray Disc titles.

With rollout of Express kiosks complete, NCR’s net capital expenditures dropped nearly 54% to $32 million in the quarter, compared with $69 million last year.

About the Author: Erik Gruenwedel

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