Has Blockbuster Busted?

Blockbuster (BBI) began the day trading for just under $1. The company has been on the ropes for quite some time now, as Netflix (NFLX) has changed the video rental model. Blockbuster has tried to catch up but it is saddled with a whole lot of costly real estate. It appears that this predicament has finally caught up to them. Fox Business Channel broke this around 3 o’clock ET,

“… Just minutes ago, trading in Blockbuster was halted. It looks like the biggest video retail chain may actually be exploring bankruptcy. How many of you have rented movies from Blockbusters over the years? Maybe not over the last couple years because they’re the stock is at pennies. Look at the real competition. Netflix spiking when word about Blockbuster hiring attorneys to explore bankruptcy came out. Shortly after 2:00 P.M. Netflix is spiking $4.18. It’s Netflix that’s the big competitor here….a year ago Blockbuster was interested in merging with circuit city. They’re gone. Blockbuster looks like it’s in trouble now…”

Bloomberg is reporting that the company is seeking bankruptcy advice. We will continue to monitor the situation, but things are not looking good as shares were down 77% before trading was halted.

Comments

[mkreisel:]

Blockbuster will go out of business and be liquidated like Circuit City.

It was really funny when a few years ago, certain ANAL-ysts claimed that Netflix had awakened "a lion" and would be crushed like "a bug".

Mar 03 03:48 PM

[boisterousbob:]

I shall go out and rent a dozen movies immediately.

If the liquidator wants them he can come collect them :D

Mar 03 04:16 PM

[User 368898:]

Hey Bloomberg,

Steve Jobs Died, my Mum backed over him in the driveway.

Mar 03 04:21 PM

[John Inman:]

BB needs to buy MovieCube, update the machines so they are not so slow and take on Redbox.

Mar 03 04:45 PM

[Sentinel:]

Of course they are.

They have WAY too much real estate. They were criminally slow to introduce a streaming/online distribution model, and REDBOX is outside EVERY Wal-Mart, McDonald's, (Insert Name Here) SuperMarket in town.

I used to be a manager of a few Blockbuster Stores. I never go there now for rentals. Their help is even less helpful, their stores are dirty and I can find what I need at a REDBOX kiosk.

R.I.P Blockbuster!

Mar 03 05:16 PM

[xsellside:]

The heck with 'em all, I'm going to start downloading movies off the internet. Gotta save money, there's a recession ya know.

ps. time to cancel my blockbuster online subscription. I'd hate to end up in some perma-bill limbo.

Mar 03 05:34 PM

[enrique:]

The reporter that wrote that story should be fired and prosecuted for manipulation of the financial markets.. The story was not accurate. She should suffer the same fate as those that 'pump and dump' small caps in stock chat rooms.

Mar 03 07:25 PM

[avi8tor:]

Blockbuster will be bought by Lionsgate - Why else would Carl Ichan be taking such an interest in both companies.

Mar 03 07:31 PM