Coinstar Reports First-Quarter Profit to Top Previous Forecast

Coinstar Inc.

Coinstar Inc.

Coinstar Inc. heaved its first quarter forecast, stating cost efficiencies in obtaining content and higher demand for its movie rental kiosks and lower card-processing fees for Redbox. The after-hours trading saw a rush of shares for Coinstar. The stock went up 14 percent at $70.01, which trumps the previous all-time high it hit in November 2010.

Coinstar believes that it was doing well while making its ‘workaround’ more efficient, contributing more to less than expected operating expenses. Redbox started its ‘workaround’ early in 2012 to obtain Warner Bros. content after the Time Warner Inc. Studio insisted on doubling its delay to deliver DVDs to 56 days as part of a direct-supply arrangement.

Coinstar has increased efficiencies in that workaround process

Coinstar continues to benefit from ‘better than expected consumer acceptance’ of an increase in its Redbox price. The company raised one-day DVD rentals to $1.20 a day from $1 in October, its first price increase in eight years. Though the company experienced a demand drop-off when it tested the increase in trial markets, executives have said previously that when it officially instituted the higher prices in the fourth quarter, demand wasn’t nearly as challenged.

Coinstar profits also benefited from lower-than-expected card processing fees for Redbox, partly thanks to an early roll-out of the single-billing program in March. The program, designed to address increased debit-card interchange fees because of the Durbin Amendment, modified Redbox billing so that the kiosks charge a customer one time upon rentals’ return rather than several times, thus reducing the fees Coinstar must pay.

First-quarter earnings expected to be $1.36 to $1.4 for Coinstar

Coinstar also accepted additional expense savings from constructive timing because several programs and new hires moved to later in 2012. Coinstar said it expects first-quarter core earnings of $1.36 to $1.40 a share on revenue of $567 million to $569.2 million. In February, the company forecast income of 76 cents to 91 cents a share on revenue of $530 million to $555 million.

Due to the rise of first-quarter guidance, additional benefit from price increase and extension of its Universal content license in March, Coinstar also raised its full-year forecast. The company is now expecting earnings of $4.40 to $4.80 a share and revenue of $2.16 billion to $2.28 billion. It previously forecast core earnings of $3.80 to $4.30 a share on revenue of $2.08 billion to $2.25 billion.

Most of the revenue of Coinstar is derived from its Redbox DVD kiosks, while it continues to operate its namesake coin-counting machines. Its DVD-rental business has quickly expanded over the past few years, though questions have emerged about its long-term growth prospects. In part to address those worries, Coinstar has partnered with Verizon Communications Inc. to launch an online streaming video entertainment service. But so far, the companies have offered few specifics about the joint venture.

Richard Meryn
Richard Meryn, Associate Editor Industry Leaders Magazine (www.industryleadersmagazine.com)

Recent Posts

iPhone 13 and iPhone 13 Pro: Specifications, Release Date, Features and much more

iPhone 13 and iPhone 13 Pro: Specifications, Release Date, Features and much more

Apple iPhone 13 Pro and iPhone 13 Pro Max can be a hit with its ever new technology A15 Bionic chip and other cool profound features.
1 day ago
Total signs $27 billion energy deal to fund 1-gigawatt solar power plant

Total signs $27 billion energy deal to fund 1-gigawatt solar power plant

The French oil major, Total, has signed a $27 billion deal to fund a 1-gigawatt solar power plant, and boost oil and gas production in the Middle-East region.
1 day ago
PMI seals $1.51 billion takeover of British inhalation specialist Vectura

PMI seals $1.51 billion takeover of British inhalation specialist Vectura

Philip Morris International (PMI) acquires a 22.6% stake in British inhalation specialist Vecutra closing in on the controversial $1.51 billion takeover.
2 days ago
Apple co-founder Steve Wozniak joins the space race

Apple co-founder Steve Wozniak joins the space race

Wozniak, popularly known as “Woz”, is setting up a private space company with Ripcord co-founder Alex Fielding. In a tweet, Wozniak shared a promotional video for the company c
3 days ago
Auto chip shortage affects its production; factory closures rise

Auto chip shortage affects its production; factory closures rise

Automakers like Peugot, Ford, and Toyota are on the run to regain high-margins from the auto chip making since the pandemic and weather disasters have taken over.
3 days ago
Boeing bullish on growth in Asia-Pacific region

Boeing bullish on growth in Asia-Pacific region

Boeing, the US manufacturer projects that its global fleet of airline planes will surpass 49,000 by 2040.
4 days ago