On May 2, market-leading movie rental chain Blockbuster
- As predicted, revenues came in strong, but the net result was horrendous.
- Ordinarily, operating cash flow for a capital-intensive business like Blockbuster would look better than its net income. Depreciating and amortizing piles of movies and company-owned stores doesn't come into play on the cash flow level. But $176 million in changes in working capital reversed that benefit this time.
- Blockbuster's Total Access program may be stealing subscribers and revenue away from online rental rival Netflix
(NASDAQ:NFLX) , but earnings do not seem to follow. Netflix, on the other hand, doubled its net profits this quarter.
(Figures in millions, except per-share data)
Income Statement Highlights
|
Q1 2007 |
Q1 2006 |
Change |
|
|---|---|---|---|
|
Sales |
$1,473.0 |
$1,396.9 |
5.4% |
|
Net Profit |
($46.4) |
($1.9) |
Big % |
|
EPS |
($0.24) |
($0.01) |
Big % |
|
Diluted Shares |
189.4 |
188.0 |
0.7% |
Get back to basics with the income statement.
Margin Checkup
|
Q1 2007 |
Q1 2006 |
Change* |
|
|---|---|---|---|
|
Gross Margin |
51.7% |
56.5% |
(4.8) |
|
Operating Margin |
(1.3%) |
2.3% |
(3.6) |
|
Net Margin |
(3.2%) |
(0.1%) |
(3.1) |
Margins are the earnings engine.
Balance Sheet Highlights
|
Assets |
Q1 2007 |
Q1 2006 |
Change |
|---|---|---|---|
|
Cash + ST Invest. |
$182.3 |
$223.7 |
(18.5%) |
|
Inventory |
$806.2 |
$779.3 |
3.5% |
|
Liabilities |
Q1 2007 |
Q1 2006 |
Change |
|---|---|---|---|
|
Accounts Payable |
$442.4 |
$415.4 |
6.5% |
|
Total Long-Term Debt* |
$921.1 |
$1,073.7 |
(14.2%) |
The balance sheet reflects the company's health.
Cash Flow Highlights
|
Q1 2007 |
Q1 2006 |
Change |
|
|---|---|---|---|
|
Cash From Ops. |
($144.0) |
$41.0 |
N/A |
|
Capital Expenditures |
$11.0 |
$8.1 |
35.8% |
|
Free Cash Flow |
($155.0) |
$32.9 |
N/A |
|
($8.0) |
$41.3 |
N/A |
Free cash flow is a Fool's best friend.
Related Foolishness:
- Before the Call: Blockbuster
- Date Netflix, Marry Amazon, Kill Blockbuster
- Foolish Fundamentals: Margins
Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean.
Netflix is a Motley Fool Stock Advisor pick. Discover all of Tom and David Gardner's superior stock selections with a free 30-day trial subscription.
At the time of publication, Anders Bylund was a Netflix shareholder, but had no other position in any company mentioned. He did resist a strong temptation to include poetry in this article. Fool rules are here.
