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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Blockbuster is a dead business
By viperpa on 4/7/2009 11:48:09 PM , Rating: 2
I use to rent from Blockbuster but not anymore because of the changes they made to there online rentals. Blockbuster use to offer a 7 movie package online until they decided to change it to 3 but also allowing you to rent in store. The reason why I got that 7 movie package was so I didn't have to run to the store and rent a movie. I didn't care if it took a couple of days to get a movie. I am not in a rush like most people who need to watch the movie right then and there.

There are the reasons why I don't go to Blockbuster:

1) The store by me was always out of the new releases. One time I had to wait almost 2 weeks to rent a movie. I don't mind waiting but that was ridiculous.

2) They kept on changing the format of the store because there wasn't any room for the new or fairly new movies. So they got rid of a lot of the older movies.

3) Couldn't reserve a movie like I was able to at my local video store.

4) They changed there online business so you can only rent 3 movies at a time.

5) The store movie exchange is worthless since Blockbuster offers more movies online than they do in the stores.

The fact is, Blockbuster can't compete with Netflix because Blockbuster has to still support there brick and mortar stores. Blockbuster can't have a total separate online business without taking away from there core business. That's why they changed over to doing a store exchange. They can get rid of there brick and mortar stores and just go online but that is taking a big gamble.

In the end, Blockbuster lost out because they didn't adjust to changing market conditions fast enough. Then they tried to play catch up but it was to late. They still wanted to keep there old business model while Netflix got ahead of the game. If Blockbuster goes away then Netflix will be the only online DVD movie rental business.

"Spreading the rumors, it's very easy because the people who write about Apple want that story, and you can claim its credible because you spoke to someone at Apple." -- Investment guru Jim Cramer
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