BB Liquidating Inc. (BLIAQ)

[fredman]

Blockbuster's Terrible Q1

Blockbuster (BBI) is not a stock any sane investor should buy. First, it's under a buck. Second, it is currently down over 20% in afternoon trading, backed by significant volume. I'm seeing a price of just under 40 cents as I write this. Not a good situation.

Yet, I'm sure there are a fair amount of professional speculators out there making bets on the business. Hey, I can't predict the future, but I just don't see how anyone can take a chance on the shares. The one-year chart is terrible. And the most recent earnings report, released yesterday after the bell, is likewise a horrible sight to behold.

Maybe some event will come along and act as a positive catalyst, giving the speculators the pop they need to make a lot of money. But, in my opinion, there's nothing to indicate a solid likelihood of such a dream scenario occurring.

In the end, we're left with a risky business model whose latest quarterly numbers support the thesis that a struggling management team will continue to struggle for a long time to come.

An adjusted loss of 14 cents per share was booked in this year's Q1 compared to a profit last year. That was the same figure analysts were looking for.

Worse, domestic same-store sales declined 7.8%. Let's face it: alternative ways to score movie rentals, such as ones offered by Netflix (NFLX), Coinstar's (CSTR) Redbox, and Comcast's (CMCSA) on-demand platform, are destroying the mighty home-video brand that isn't so mighty anymore.

I doubt many investors need this advice, but here it is anyway: avoid Blockbuster like the proverbial plague. Your portfolio will thank you.

Source: http://www.bloggingstocks.com/2010/05/14/blockbusters-terrible-q1/