bbi

Here are some highlights from this past week's earnings coverage on BloggingStocks:

• Abercrombie & Fitch Co. (ANF) lower Q3 results still topped expectations and sent shares higher.
• Applied Materials Inc. (AMAT) posted much better-than-expected Q4 earnings, the first profit in a year.
• AstraZeneca (AZN) received an analyst's downgrade due to concerns over its earnings prospects.
• Blackstone Group (BX) received an analyst's upgrade following the company's Q3 results.
• Blockbuster Inc. (BBI) widened its net loss in Q3 and revenue and same-stores sales declined.
• Clean Energy Fuels Corp. (CLNE) shares declined after its Q3 numbers fell short of expectations.
• Consolidated Water Co. Inc. (CWCO) earnings prospects for 2010 earned it an analyst upgrade.

Blockbuster (BBI) is a terrible company and stock. After perusing the third-quarter report, published Friday after the bell, I don't see any reason to modify such a rough statement.

Sorry about that, but what else can I say about a huge revenue decline and a wider loss coupled with a story that continues to deteriorate? According to the Q3 earnings release, Blockbuster experienced a 21% drop on the top line. On an adjusted basis, the company lost 20 cents per share, compared to 9 cents per share in the comparable period a year ago. Helping to drive this abject performance was a 14% contraction in same-store sales.

Best Buy (NYSE: BBY) may be the world's largest electronics retailer, but it realizes that it faces a huge threat to a hefty chunk of its business. Apple (NASDAQ: AAPL) is moving plenty of movies and other soon-to-be former DVD fare through iTunes, staking a claim on a business that once belonged to Best Buy. The big box store is getting ready to fight back (finally?).

Using technology it's licensing from Sonic Solutions (NASDAQ: SNIC), Best Buy is opening an online store for movies and television shows. Best Buy CEO Brian Dunn says this move will expand the company's presence in services and will bolster company loyalty. That's the press release version, of course. The reality is that Best Buy needed to do something to protect this portion of its revenue and probably should have made the move several years ago.

Late Wednesday, Blockbuster Inc. (NYSE: BBI) scored a ratings upgrade from Standard & Poor's. The ratings agency raised Blockbuster's corporate credit rating from "CCC" to "B-" with a stable outlook. S&P commented, "The stable outlook reflects our belief that liquidity will remain adequate over the near term despite continued operational weakness and moderate deterioration of the company's credit protection metrics."

S&P's new rating is still six notches into junk territory, but the upgrade is nevertheless a vote of confidence in Blockbuster's refinancing efforts. On Monday, the video rental firm announced plans to offer up to $340 million in senior secured notes due 2014, and yesterday, Blockbuster said it would close up to 40% of its brick-and-mortar stores during the next two years.

Here are some highlights from last week's earnings coverage from BloggingStocks:

• Applied Materials Inc. (NASDAQ: AMAT) posted better-than-expected Q3 results, sending shares higher.
• AutoDesk Inc. (NASDAQ: ADSK) reported better-than-expected Q2 earnings, sending shares higher.
• Blockbuster Inc. (NYSE: BBI) had another disappointing quarter as same-store sales declined.
• CIT Group Inc. (NYSE: CIT) delayed its Q3 report due to ongoing debt restructuring and a possible bankruptcy.
• Dr Pepper Snapple Group Inc. (NYSE: DPS) Q2 earnings came in well ahead of Wall Street expectations.

The only really important bit of financial news today was the Reuters/University of Michigan consumer sentiment figure for August. It declined to 63.2 from 66 in May. The consensus among economists polled by MarketWatch was the August's figure would be 69. The portion of the poll called the "expectations index" hit its lowest level since March.

That is particularly bad news because March was the depth of the recession. Analysts were at a loss to explain why the consumer's picture of the economy had turned sour so fast. It is certainly a sign a rebound in spending may be well off in the future, which could be bad news for the upcoming holiday season.

Today's unofficial closing numbers:

Dow 9,321.40 -76.79 (-0.82%)
S&P 500 1,004.09 -8.64 (-0.85%)
Nasdaq 1,985.52 -23.83 (-1.19%)

Blockbuster (NYSE: BBI) remains troubled. Just look at the second-quarter report that was released on Thursday after the bell. Net sales dropped over 20%, coming in at roughly $1 billion. The company lost 19 cents per share, one penny better than the loss reported in the year-ago period (to which I say, big deal!). According to the preview, the market wanted to see $1.1 billion for the top line and a loss of only 12 cents for the bottom line. A failure on both counts, I'm afraid.

Cash flow was the more attractive part of the Q2 story. The company calculated its free cash flow to be about $109 million. Okay, I'll give Blockbuster a good mark for having positive cash flow this year.

Last week offered mixed messages about whether an economic recovery is indeed underway. The unemployment figures were not as bad as feared, but July sales numbers were nothing to write home about, despite the wild popularity of the so-called cash-for-clunkers program.

The question is, where has consumer confidence (and consumer spending) been? Retail is a good place to look, and as it turns out, this week several shopping mall and strip mall favorites will be reporting earnings for the most recent quarter.

Could this be the next logical step in the video war between Blockbuster (NYSE: BBI) and Netflix (NASDAQ: NFLX)?

A report contends that Netflix will soon offer its "Watch Instantly" video-streaming feature for the iPhone and the iPod Touch, as well as the Nintendo Wii gaming console. Netflix already allows subscribers to manage their movie queue and search for movies via their iPhones, so watching their choices on the smartphone would be the next logical step.

Netflix (NASDAQ: NFLX) released its Q2 report on Thursday after the bell. You had to like what you saw. Revenues increased 21%. Total subscribers went up 26%. Growth in net subscribers on a year-over-year basis was impressive, as was the increase observed in the gross margin. Free cash flow was up. And now for the final piece of the performance puzzle: adjusted earnings per share increased 29% to 58 cents. Very good.

Consumers have really taken to the Netflix model. They love getting DVDs by mail. And Netflix has really done a job on its major competitor, Blockbuster (NYSE: BBI). No doubt about it, I'm sure a lot of Blockbuster shareholders are wishing they were invested in Netflix.

Despite us being on the heels of the big Russell indexes changing and despite the quarter-end being a day away, this was a boring day. A study showed a small decrease in online job advertisements, but that was the only item on the economic front. Oil traded higher and bond yields came down as traders are voting for more stability the rest of the year there.

Here are today's unofficial closing bell levels:

Dow 8,531.19 +92.80 (1.10%)
S&P 500 927.18 +8.28 (0.90%)
Nasdaq 1,843.34 +5.12 (0.28%)

Top Analyst Calls

Netflix (NASDAQ: NFLX) CEO Reed Hastings says his biggest competitor isn't the one that his company is most often grouped with. It's not Blockbuster (NYSE: BBI), the largest brick-and-mortar rental chain, and it's not the internet -- where technological gains are making streaming video the wave of the future.

No, according to Mr. Hastings, the biggest competitor is Coinstar (NASDAQ: CSTR), the coin counting business that also happens to own Redbox, the network of 15,400 vending machines that rent movies for $1 per night. Redbox is installing another machine every hour.

With listed stocks getting knocked around, the New York Stock Exchange is considering extending temporary relief from listing requirements. Once a company is dropped from the exchange, it runs risks ranging from market cap loss to limited liquidity. But NYSE Euronext (NYSE: NYX) CEO Duncan Niederauer was clear that the moves are not permanent. For now, the goal remains to protect companies that are at risk of being delisted. This comes after the S&P 500 fell 38% last year -- its worst performance since 1937.

The two rules that have been relaxed are the maintenance of a share price of at least $1 and a market cap of at least $15 million. The return of both measures was delayed back in April. Currently, 31 companies on the NYSE are at risk, including Blockbuster Inc. (NYSE: BBI) and Lear Corp (NYSE: LEA).

Netflix (NASDAQ: NFLX), a DVD-rental business that competes with Blockbuster (NYSE: BBI), was upgraded yesterday by Michael Pachter, an analyst with Wedbush Morgan Securities. He sees good tidings ahead for the company. He believes that Netflix will see higher margins and a healthy stream of earnings. His thesis centers on the fact that the subscriber base is likely to grow and that streaming movies will lower the cost of delivery.

Upgrades are tricky beasts. Ideally, an investor or, more likely, a trader, wants to be in the stock before the upgrade occurs. Buying a company after it's been upgraded requires a lot of due diligence. And you have to get over the fact that you might be buying at a high price.

Here are some highlights from this past week's earnings coverage from BloggingStocks:

• Abercrombie & Fitch Co. (NYSE: ANF) reported dismal Q1 numbers as same-store sales plunged.
• Applied Materials Inc. (NASDAQ: AMAT) dismal Q2 results were in line with analysts' expectations.
• Bankrate Inc. (NASDAQ: RATE) reported lower earnings and revenue for Q1 and offered no guidance.
• Blockbuster Inc. (NYSE: BBI) earnings, revenue, and same-store sales all fell in the first quarter.
• Dr Pepper Snapple Group (NYSE: DPS) Q1 earnings declined but still topped analysts' expectations.