Barry Rosenstein's Jana Partners has reduced its ownership stake in Outerwall (NASDAQ:OUTR) from 8.4% of the shares outstanding to 4.9%. Its stake was once as high as 13.5%. Shares of Outerwall have soared (up over 30%) since Jana Partners first announced its purchase.

Jana Partners' push for change
At the urging of Jana Partners, the company announced a major restructuring plan in December. It announced a change in the leadership of Redbox, which is in the video-rental kiosk business, and a reduction in the workforce as it implements its restructuring plan. 

The activist investor, Jana Partners, acquired 13.5% of Outerwall in October of last year. Initially, Jana Partners had been pushing for a sale of assets or the company itself. The change in leadership involves the departure of Redbox President Anne Saunders, and leadership responsibilities for the business will rest with CEO J. Scott Di Valerio and his management team.

Outerwall also announced the discontinuation of three businesses, namely the coffee kiosk Rubi, the prepared-food kiosk Crisp Market, and the interactive photo-booth Star Studio. It aims to cut costs by approximately $22 million next year by shrinking its workforce. The company has already seen an 8.5% workforce reduction. 

Outerwall gains strength
Outerwall's revenue for the fourth quarter came in below the estimates, but it still grew by more than 5% year-over-year. Outerwall's earnings per share came in at $1.68 per share to beat the estimates after it earned $1.01 per share in the year-ago quarter.

Its Redbox revenue only grew 1.7%, but Coinstar revenue grew 8.4% year-over-year. The good news was that its new ventures segment saw its revenue rise to $16.6 million from $293,000 in the previous year, mainly driven by the company's acquisition of ecoATM.

The future is beyond movies and coins
With the likes of Netflix (NASDAQ:NFLX) and getting more aggressive in the content-streaming sector, Outerwall is turning to other areas of the market for growth. Its future revenue growth will likely come from customers who are trading in used mobile devices and unused gift cards.

Netflix continues to grow at an impressive rate. Just last quarter, Netflix added some 4 million subscribers, increasing its global subscriber base to 48 million. It also has a large selection of over 40,000 movies and TV shows, and is developing its own content. New content, such as House of Cards, has resulted in subscriber gains as well. However, while Netflix has a rich valuation with a P/E of 185, Outerwall trades at a P/E of 11.

Finding growth in mobile and gift cards
Outerwall's future relies on finding faster avenues of growth. This begins with its newest acquisition, ecoATM, which runs kiosks where customers can trade in their used smartphones and tablets in return for cash. Other new initiatives include Coinstar Exchange, which operates kiosks where people can exchange unused gift cards at retailers for cash. Then there are SampleIt kiosks, which sell samples of products such as snacks and cosmetics for $1 apiece and offer coupons for the regular products. The company wants to generate between 9% and 12% of its revenue from its new initiatives by 2015--these products only generated 3% of its revenue in the fourth quarter. 

The new initiatives are exciting growth opportunities for Outerwall. The market for used mobile device trade-ins was worth $1.4 billion last year, but expectations call for it to grow to more than $7 billion by 2018. This comes as the product refresh cycle is shortening. The likes of Apple are refreshing their phones every six months or so. The turnover in phones is only increasing, and as a result more mobile devices need to be recycled. In its fiscal second quarter, Apple sold 43.7 million iPhones, dwarfing estimates which called for it to sell 37.7 million. Meanwhile, iPad sales came in at 16.35 million. Despite the number of devices that Apple continues to sell, it trades at a P/E of 14. However, this still exceeds the valuation of Outerwall. 

Bottom line
Jana Partners looks like it has set up the company up for future growth. Outerwall is building a strong portfolio of businesses that leverage shoppers' desire for convenience. Investors who are interested in gaining exposure to a unique business that's tapping various markets should take a look at Outerwall.

Marshall Hargrave has no position in any stocks mentioned. The Motley Fool recommends Apple and Netflix. The Motley Fool owns shares of Apple and Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.