Print 71 comment(s) - last by callmeroy.. on Apr 30 at 10:41 AM

Blockbuster may have been busted by Netflix

For many years Blockbuster video enjoyed great success in the movie rental business. Blockbuster is one of the largest movie rental chains in the country, but the company has found that its continued existence is far from guaranteed.

Blockbuster has announced that there is "substantial doubt" about its ability to continue as a going concern. A going concern is a qualification that refers to an auditor's assessment of a company's ability to continue operations reports MSNBC.

Blockbuster is struggling with profitability and viability in the face of the rising popularity of mail-order rental services like Netflix the company stated in a SEC disclosure. Blockbuster had previously disclosed that an auditor was likely to raise doubts about its long-term viability.

Blockbuster stated last week that its revolving and term loan agreement had been amended giving the company a $250 million revolving loan for financing maturing on September 30, 2010. The company thinks it will be able to close the financing around May 11, but states that the closing of the loan is not assured at this point.

Blockbuster says that even if the loan is funded it, "may not have sufficient liquidity to finance the ongoing obligations of our business, which raises substantial doubt about our ability to continue as a going concern."

Blockbuster shares fell 3 cents to 85 cents in trading after hours after closing at 88 cents reports MSNBC. In July of 2008 Blockbuster was considering the purchase of now defunct Circuit City.  

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Do what Circuit City should have done
By luceri on 4/7/2009 1:40:19 PM , Rating: 2
Circuit City's largest profits came from its online store. They should have closed up shop and went online to compete directly with newegg with low prices and quality service before it went beyond that point.

Best buy needs to do the same with netflix and they need to do it in a big way. They need something to counter the netflix / xbox360 deal. PS3 isn't good enough, they need a wii app if possible and stream movies over the wii. They need massive restructuring and they need to do it now or else it'll be too late. Close down all the stores that aren't making a profit today and start the transition to an online business.

By MrCoyote on 4/8/2009 12:54:53 AM , Rating: 2
True. I use XBOX 360 with Netflix streaming. If I want a movie that night, I rent one through XBOX Live Marketplace. About the same price, if not cheaper than having to drive to a store. It's all about convenience.

“Then they pop up and say ‘Hello, surprise! Give us your money or we will shut you down!' Screw them. Seriously, screw them. You can quote me on that.” -- Newegg Chief Legal Officer Lee Cheng referencing patent trolls
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