What's good for the goose might kill the gander. Coinstar
The company just lowered its fourth-quarter guidance based on disastrous Redbox results, which is why Coinstar's stock is taking a steel bath today. The original forecast called for sales of $427.5 million and $0.82 of earnings per share at the midpoint of the ranges. Now Coinstar sees $391 million of revenue and roughly $0.67 per share of GAAP earnings. That's a significant miss, folks. The stock is suffering for a reason.
Management pointed fingers right at that 28-day restriction. "This was redbox's first holiday season with 28-day delayed titles, and we underestimated the impact that the delay would have on demand during the fourth quarter," said CEO Paul Davis.
That makes perfect sense to me. A four-week delay might not matter much to consumers expecting the supreme convenience of at-home delivery, but rental kiosks are an impulse-buy situation. Catch the customer's eye with the goods on hand or lose the interest and the sale. I fully expect NCR
Coinstar is partly locked into this 28-day delay model now, at least when it comes to titles produced by Time Warner
Coinstar will adjust its purchasing patterns and lower its reliance on Blu-ray discs. Is that good enough to counterbalance the impulse-killing delays in the long run? Add Coinstar to your Foolish watchlist and then discuss the matter in the comments below.
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