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Coinstar Profit, Revenue Up Sharply on Redbox Growth

6 Feb, 2012 By: Chris Tribbey

Redbox parent Coinstar announced revenue of $520.5 million for the fourth quarter of 2011, up more than 33% from the $390.7 million it reported during the same period of 2010.

The jump primarily was due to a nearly 40% year-over-year jump in revenue from Redbox, which earned $445.6 million during the three months ended Dec. 31. Coinstar executives credited the results to the strong performance of new-release titles and consumer acceptance of a DVD rental price increase, from $1 to $1.20 a day, implemented Oct. 31.

Coinstar profit for the quarter stood at $31.5 million, up from $11.7 million during the same quarter in 2010. 

“The strength of our core businesses provides a solid foundation that enables us to focus on key growth initiatives in 2012, including our joint venture with Verizon that was announced earlier today,” said Coinstar CEO Paul Davis. “We are delighted to be partnering with Verizon to offer consumers affordable entertainment in both physical and streaming formats and look forward to launching our service in the second half of the year.”

“We also are very pleased to announce the acquisition of the assets of NCR's DVD business and the opportunity to work with NCR as we develop our portfolio of innovative, self-service concepts,” he added.

The acquisition, for which Redbox reports it will pay up to $100 million, includes DVD kiosks, some retailer contracts, and DVD inventory from NCR's entertainment line of business.

Full-year 2011 revenue for Coinstar stood at $1.85 billion, up 28.5% from 2010.

For 2012 Coinstar is projecting revenue between $2.07 billion and $2.25 billion and earnings per share between $3.80 and $4.30. For the first quarter of 2012, Coinstar is projecting revenue between $530 million and $555 million and earnings per share between 76 cents and 91 cents.

Redbox rented 684 million DVDs during the year. Redbox now accounts for 37% of the physical disc rental market in the United States, according to Coinstar. The company installed 5,200 net new kiosks during 2011.

Video game rentals contributed approximately 7.5% of revenue to Redbox’s fourth quarter, while Blu-ray Disc rentals represented 6.8% of Redbox revenue.

By the end of the second quarter of 2012, Coinstar expects to rollout a Canadian test of between 100 and 150 Redbox kiosks.

For the first quarter of 2012, Redbox expects to stock a total of 45 titles that earned $5 million or more at the box office.

Regarding the Jan. 31 end of its agreement to acquire discs directly from Warner Home Video, Davis said that while Redbox should see both lower revenue and lower margins by having to buy Warner titles from retail, Redbox does expect to stock their titles shortly after street date.

“We’re competing with a 28-day window,” Davis said. “We think we can get it in much sooner.”

About the Author: Chris Tribbey

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