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Summary:

Despite its advantage over rivals Netflix (NSDQ: NFLX) and Redbox in offering new releases for rent, Blockbuster (NYSE: BBI) continued to st…

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Despite its advantage over rivals Netflix (NSDQ: NFLX) and Redbox in offering new releases for rent, Blockbuster (NYSE: BBI) continued to struggle in Q2. In addition to its poor earnings results, the movie rental chain also issued new warnings about the possibility of a bankruptcy, in a 10-Q filing.

That’s not to say that Blockbuster doesn’t have a chance of avoiding Chapter 11. Last month, the company, which owes $1 billion in debt, entered into a forbearance agreement with about 70 percent of its lenders. The extension of the forbearance period to September 30, 2010 provides Blockbuster with additional time and flexibility to work out its recapitalization plan.

While the bet the company placed on its retail stores has been undoing in the face of competition from Netflix, Redbox and online streaming in general, Blockbuster has been trying to expand its digital services. It struck a partnership with Comcast (NSDQ: CMCSA) that connects its by-mail service to the cable operator’s subs; it also added 6,000 machines to its Blockbuster Express and expanded Blockbuster-On-Demand through Verizon Wireless

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  1. Harry Wayne Huizenga was born of Dutch descent at Little Company of Mary Hospital, Evergreen Park, Illinois, on December 29, 1937, to Gerrit Harry and Jean Huizenga.1 He would later be called by his middle name Wayne. His sister Bonnie is five years his junior.Yet Wayne felt there must be more to life than this. So in 1984, at age 46, he stepped down as vice chairman and started chasing new adventures. He shoveled his millions into small businesses in fields as varied as lawn care and insurance, bottled water and hotels In February 1987, John Melk, Wayne’s friend and business partner, convinced Wayne to visit a Blockbuster video store near Chicago that he owned. Skeptical at first, that visit helped convince Huizenga, along with Melk and Don Flynn, then-chief financial officer at Waste Management, to invest in Blockbuster.

    So Huizenga, with help from Melk and other pals, bought control of the whole company –which then was known as Blockbuster Video and owned only eight stores, with 11 more franchised — for $18 million. On April 27, 1989, Blockbuster was listed on the New York Stock Exchange – the second such company Wayne Huizenga brought to the New York Stock Exchange.12 Waste Management began trading shares on the NYSE on October 25, 1973 On September 29, 1994, at the last Blockbuster’s shareholders meeting, H. Wayne Huizenga tearfully stepped down as chairman of Blockbuster Video after they had merged with Viacom, Inc. He did not want to be second in command to anyone, including Sumner Redstone who was the chairman of Viacom. During his reign at Blockbuster over the seven years, he had built the company from $7 million into $4 billion Blockbuster was able to add a store every 17 hours on average between 1988 and 1994, absorbing many acquisitions

  2. Nomo Blockbuster Friday, August 13, 2010

    And now look what the company has turned into. Even if Blockbuster eventually makes its payment, it is not going to have enough cash to last until the end of the year. Per Blockbuster’s 10-Q, the company is bleeding cash with only about $64 million available compared to roughly $189 million six months ago. Compare that to the more than $1.2 BILLION in current liabilities, that means that for every $1 that Blockbuster has, it owes $20.

    Looking at the statement of cash flows on the 10-Q, Blockbuster is actually using up more money to operate than not to operate as evidenced in the large amount of cash used (not provided, used) in operating activities. It is clear that Blockbuster does not know what is good for it and just continues to stand around lifelessly until somebody finally kills it and puts it out of its misery. There’s no reviving this company and anyone that continues to support it is delusional.

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