A Solution to NCR's Blockbuster Lawsuit: Buy Coinstar

Jun. 13, 2011 9:16 AM ETNCR, BLOAQ, DISH, OUTR, SWY, AMZN1 Comment
Rocco Pendola profile picture
Rocco Pendola

Mention NCR Corporation (NCR) to the average person (including myself) and he would not be able to tell you what the company does. Some irony exists in that reality, given that most of us tend to encounter NCR on a daily basis. From the company's latest annual report:

(Click to enlarge)

The kiosk business includes DVD rental machines. NCR brands these machines using the Blockbuster (OTC:BLOAQ) Express trademark. Long story short, Blockbuster's new owners hope to ixnay the whole arrangement. NCR has sued, arguing that, regardless of Blockbuster's sale to DISH Network (DISH), they have the right to use the Blockbuster likeness on their kiosks. While I understand the lawsuit, it surprises me a bit. It seems to me that NCR could spend its time -- and money -- more wisely by making an aggressive attempt at dominating the DVD rental kiosk space.

For months, rival Coinstar (CSTR) has made empty threats that it will partner with somebody, somewhere to commence online streaming. Depsite its ups and downs, Coinstar finally appears back on track. If its smart, it thought better of getting into a streaming effort it simply cannot afford. Management seems better focused in recent weeks. Last week, Coinstar closed a deal to bring 1,400 of its coin-counting kiosks to Safeway (SWY) stores across the country. One analyst believes the Safeway deal serves as an end-around to knock Blockbuster kiosks out of the grocery store chain. Coinstar leads the space numbers-wise; it operates roughly 30,200 Redbox machines at more than 26,000 locations. NCR, however, bites at its heels by penetrating more and more markets.

I don't see the point in these squabbles -- NCR v. Blockbuster or Coinstar v. NCR. NCR could render the Blockbuster thing moot. And Coinstar could provide incredible value to its shareholders -- people it colored

This article was written by

Rocco Pendola profile picture
Based in Los Angeles, Rocco Pendola is Seeking Alpha's Director of Tier 1 contributors. If you're interested in becoming a Seeking Alpha contributor, message or email me. If you're currently a Seeking Alpha contributor and have questions or would like to discuss your contributions and status on the platform, also feel free to make contact.

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