This afternoon Blockbuster Inc (BBI) reported Q4 earnings:
Blockbuster Inc Reports Q4 -$0.24 v -$0.12 expected, Revenue $1.08B v $1.1B expected
- SSS (same store sales) -15.9% (domestic), -14.7% (worldwide)
- In 2010, continues to expect to close a range of 500 to 545 under performing domestic company-owned stores.
To say that Blockbuster is having problems would be an understatement.
The worst part of today’s earnings release is the statement that the company is a ‘going concern’
Blockbuster continues to actively explore various recapitalization opportunities, which may include a recapitalization of the Company’s outstanding debt or equity securities.
Management anticipates the report of the Company’s independent registered public accounting firm relative to the Company’s 2009 consolidated financial statements will contain an explanatory paragraph indicating that substantial doubt exists with respect to the Company’s ability to continue as a going concern. The Company’s independent public accountants have advised management that such an opinion will be related to the risk that the Company will have a low level of liquidity, particularly as a result of decreased cash from operations.
There are two phrases that CEO’s don’t want to hear. The first one is ‘”60 minutes is here for an interview”, and the other is that the auditors of the firm are using ‘going concern’. In my experience, when a company gets the dreaded ‘going concern’ from their auditors it usually does not work out well in the end.
Blockbuster (BBI) is trading at $0.32 per share in after hours following this news.
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