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Coinstar Shares Rally (CSTR)

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Coinstar Inc. (NASDAQ: CSTR), Redbox’s parent company said on Friday that it is poised to register spectacular gains in the fiscal first quarter as Redbox – a chain of video rental kiosks – did fairly well despite hike in prices.

The announcement sent CSTR shares sharply higher on Friday. CSTR more than 7% after the company revised its full-year guidance –which the company says is better than expected.


Even though Redbox raised its rental price for DVD from $1 to $1.20 in October- the demand barely faltered. As a result, Coinstar boosted its revenue projections for the fiscal first quarter. Whereas the original revenue projections stood between $530 million to $555 million, the revised revenue projections stand between $567 million and $569.2 million.

The company said its earnings before taxes and other deductions would be between $127.9 million and $130.1 million — a significant boost from earlier projections of between $94 million and $104 million. The company is expected to announce its quarterly results on April 26.

Meanwhile the company also revealed that its ongoing spat with Warner Brother could be over anytime soon.  Earlier, the studio tried to bully Redbox over not renting new movies until 60 days after they went on sale.  However, Redbox did not agree with this term; as a result Warner Brothers stopped selling DVDs to Redbox. Thus, the company was forced to buy DVDs from other sources.

This development has unnerved many studios though. Hollywood is now worried that low prices rental model could severely hurt sales of DVD.

Meanwhile, Netflix (NASDAQ: NFLX)- Redbox’s rival in rental business saw its shares slid by 1% on Friday; however by the end of the trading day shares retreated.

Coinstar is expecting strong year, thanks mainly to increased Redbox sales. The company said that for all of 2012, it now estimates revenue at between $2.16 billion and $2.28 billion. Earnings before taxes and other deductions are projected between $465 million and $495 million.

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edliston
Post Written By: Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.


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Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing.

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