Blockbuster (BBI) announces layoffs; are more price cuts coming?

Blockbuster (ticker: BBI) plans to layoff 200-300 people in order to offset higher marketing expenses and its costly price war with Netflix (ticker: NFLX).

Higher marketing expenses really means 'lost fees from the No Late Fees policy'.  Here's a recap of BBI's 2005 guidance from March 9, 2005 (read the full earnings recap here):

• Revenue growth in low-single-digits
• Elimination of late fees will impact revenues by $250M - $300M in
  2005; BBI expects to offset those revenues with increased traffic,
  fewer promotions and expense management
• 2005 Operating income will be flat vs. 2004 (not including costs of
  $50M on 'No Late Fees' promotion and $40M in share based compensation
  costs)
• 1Q05 operating income will be impacted by the following costs: $80M
  form absence of late fees; $60M investment in Blockbuster Online; $50M
  in 'No Late Fees' promotion; while not stated explicitly by the
  company, the results in an operating loss of $65M
• Capex: $150M in 2005 vs. $275M in 2004
• Blockbuster Online:  BBI plans
  to accelerate its investment in the business in order to reach goal of
  2 million subscribers by 1Q06; the company plans to spend $70M in 1Q05
  and $120M in 2005 (vs. $50M in 2004)

Quick comment: As we have stated in numerous recent posts, now that the Hollywood Entertainment (ticker: HLYW) saga is over,and the 'No Late Fees' lawsuits are settled, BBI (and shareholders) will be more focused than even on the price war with Netflix.  Don't rule out the possibility of another price cut in the near future.