BBI

[calven]

I see blockbuster as a possible turnaround candidate for 2006. The stock got a huge haircut in 2005 and shorts have controlled this one for too long. Over 30% of the float is a short position according to shortsqueeze.com as of March 5 2006 - http://www.shortsqueeze.com/index.php?symbol=BBI&submit=Enter

The first tick over the top resistance trendline of the symmetrical triangle I plan on buying...

cal  

[Melf Elf]

Thai,

I thought I'd post this response to you here, rather than in the WW folder.

After failing at the upper trendline at 4.06 (validated the trendline as resistance), BBI filled the 3.79-3.81 gap, and has come on again, to the top of the pattern.

A print of 4.07 would be a "higher high," as well as a breakout above the validated trendline.

EDIT: Could get some help from the shorts, on a breakout:

BBI    $ 3.99    
Blockbuster Inc.    0.18    
Shares Short   35,270,000    
Days to Cover (Short Ratio)   15.9    
Short % of Float   32.01 %   
Short % Increase/Decrease   2.53 %   
Squeeze Ranking™   -300       
SI Record Date   2006-Mar    
Exchange   NYE    
   

   

   

[Melf Elf]

A print of 4.07 would be a "higher high," as well as a breakout above the validated trendline.

4.07 printed at 9:44AM.

[Melf Elf]

Thai,

BBI went directly to first horizontal resistance that we discussed, at 4.29 (see dotted red line on daily chart posted this morning). 

Thanks.  I owe you one. 

[Se7en]

Good time to pick some up here?
Isn't the volume a bit low/average for a breakout?

[Melf Elf]

Good time to pick some up here?

Se7en,

I daytraded the 4.07 breakout to 4.29 horizontal resistance.  It was a Decending Triangle breakout, and we had two levels of horizontal resistance, just above the breakout: 4.29 and 4.48 (see horizontal red lines on chart from this morning).

Descending Triangles in a Bear Market, generally, are continuation patterns unless you've reached a bottom.  There's the rub...unless!

We got an UPSIDE breakout this morning, out of the Descending Triangle, and a rally to the 4.29 horizontal resistance.  The chart is looking better. 

Isn't the volume a bit low/average for a breakout?

The volume so far today is good.  Average daily volume is 2.7 million shares; we've got 2.9 million shares traded so far, in less than half the full trading day.  We'll see how much comes in this afternoon.

I'm thinking about re-entering BBI next week if we get a pullback to the Descending Triangle breakout, roughly 4.02-4.06.  I want to study it some over the weekend.

[usedcasting]

Nice play Melf.

Have a super weekend.

uc

[Melf Elf]

Nice play Melf.

Have a super weekend.

uc

Thanks, uc, hope you had a good weekend!

Good time to pick some up here?

Se7en,

After studying the chart, I decided to re-enter BBI if it pulled back to the breakout.

[I'm thinking about re-entering BBI next week if we get a pullback to the Descending Triangle breakout, roughly 4.02-4.06. I want to study it some over the weekend.

It's indicated to gap higher, though, above 4.29 resistance, so I have to pass on it.

BBI currently is BID 4.41...ASK 4.48.  Next horizontal resistance is 4.48 (top dotted red line)

[Se7en]

http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B832147AC%2D63ED%2D4B3E%2D84B7%2D3048842EA126%7D&source=blq%2Fyhoo&dist=yhoo&siteid=yhoo


Blockbuster shares higher on upgrade

Last Update: 4:37 PM ET Apr 10, 2006


CHICAGO (MarketWatch) -- Blockbuster Inc. shares were higher Monday after Citigroup lifted its rating on the video rental giant to buy from hold.
Blockbuster (BBI : blockbuster inc cl a
News , chart, profile, more
Last: 4.50+0.31+7.40%

5:14pm 04/10/2006

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BBI4.50, +0.31, +7.4%) rose 31 cents to close at $4.50, a gain of 7.4%.
Analyst Tony Wible said that industry-wide DVD and video rental trends are improving, and that Wall Street is underestimating the value of Blockbuster's online business. At the same time, he said, some investors seem to be overly concerned about the impact of video-on-demand technology.
"While we believe the in-store rental industry continues to be under pressure from VOD and online rental services," said Wible in a research note, "we see BBI as best positioned in this environment through its [absence] of late fees, scale, and online business."
Wible points out that Blockbuster, already the market share leader in the video rental industry, should be able to gain an even bigger part of the market as smaller local competitors close stores.
This will in turn allow the company to achieve greater business online, Wible said, and push more traffic to its stores. The analyst says he sees Blockbuster capturing 20% of the online DVD rental market.

[stout7735]

BBI in 2006 is the "Netflix" of 2005...

[David Randolph]

1. Introduction

BBI came up on my technical filter as a bullish stock, which was kind of surprising since everybody is aware of their financial problems. I've seen many giants like this come back from the dead, it seems they are just too big to fail (remember AMR and GM, for example).

2. Profile

Blockbuster, Inc. (BBI), together with its subsidiaries, engages in the operation and franchise of entertainment-related stores in the United States and internationally.(complete profile here)

3. Technical Analysis
3.1. All History Chart



BBI was a $30 stock in 2002 and just above $5 now. It just crossed the 200 day moving average on the upside, but this isn't the first time it does that and then falls to a new low.

3.2. Medium Term Chart



We have a double bottom on the chart, just confirmed by the current bullish breakout. It looks like a trend reversal has occurred.

3.3. Short Term Chart



On Thursday and Friday the stock was able to close above $5.11, which was a short and medium term resistance level, so it is now support. The current advance phase started on November 2nd, let me check if there was any relevant news that day: Blockbuster posts narrower 3Q loss

Yes, investors enjoyed 3Q results. Let's put these results into historical context with some fundamental tests.

4. Fundamental Analysis
4.1. Number of Shares Outstanding



Despite all its problems and huge losses, BBI didn't issue many shares since 2000. A bit of a rise in 2006 to the current 190,573,906 shares. The market cap is $1.03 B.

4.2. Liquidity



The balance sheet is getting stronger, in fact, working capital is at its best since the company's IPO in 1999. This is a positive development and perhaps explains why the stock was up so much since Q3, even though EPS came below expectations:

«The Dallas-based company reported a net loss of $24.7 million, or 15 cents a share versus a loss of $491.4 million, or $2.67 a share, a year ago.

The loss surpassed the 11-cents-a-share loss analysts polled by Thomson First Call were expecting.»

4.3. Revenues



Revenues are declining as the company is closing many stores, from about 12,000 in 2000 to 8,500 today. But other segments of the business are getting traction, for example, the online business:

«Worldwide same-store sales included a $23.7 million increase in revenue from Blockbuster's online service, which posted 50 percent growth year-over-year in its subscriber base, Blockbuster said.»

The Price to Sales Ratio is $1.03 B/$5.58 B = 0.18. The Music & Video Stores industry has a PS Ratio of 0.16, so BBI is about average.

4.4. Profits



In the 9 years through 2006, BBI lost money in every one of them (the profit in 2002 is normalized income, but due to a special loss of ($1.8 B) that year the company in fact lost ($1.6 B)). Analysts are expecting EPS of ($0.05) in 2006 and $0.23 in fiscal 2007.

The forward earnings multiple is $5.4/$0.23 = 23.5.

4.5. Recent News

There are some interesting articles on BBI:
- Who's Buying Now?
- Chip Off the Old Blockbuster
- Blockbuster Up on Taiwan Sale Rumor

5. General Overview

The catalysts driving the short term advance phase are the fact that the CEO bought 220,000 shares at $4.66 and this Taiwan sale rumor. I don't think Taiwan is relevant enough, since the company only has 89 stores there out of a total of 8,519 stores worldwide.

This has been a lousy business for the past 8 years, losing billions of dollars, and yet the market cap is now $1.03 B. The stock isn't trading at a discount to the market, not in terms of projected earnings multiples.

I see 3 threats to BBI's home video rental business:

1) Downloading videos directly from the internet (many people already do this);
2) DVD prices are coming down sharply. Why rent if I can buy for almost the same price?
3) Video on Demand on the cable TV, and cable TV movie channels. I'm in Portugal, a very small market, and I have 8 movie channels in my TV.

I don't see an opportunity in BBI shares at current prices, fully valued and with dire prospects.

[calven]

Wow thanks for the analysis David! Glad to see this one is getting some attention again - it got my attention back in march.

I think this company will find a way to adapt, costcut and find a niche possibly in something like online movie rental....(maybe they even have something like this already)


Looks like a major trend change has occured - next resistance at 5.50 - support at 5.00

calven 

[setravis]

I think it was Jan 4 2007,Blockbuster hit a 52 week high,
and have 2.2 million new online members.
Turnaround Story
I was really impressed by how many subscribers they were able to add to their online hybrid rental program.
Should get some good initial earnings and sales growth momentum.
Competitive picture looks good, they just figured out how to make NFLX look ugly. Would have taken a college strategy team about a week to figure out that they should use their stores to their advantage.
It is in an overbought position so if it pulls back a little, It may be a time to establish a position.
It's been climbing, & their recent ads to enable users to order via mail & be able to return them at stores is significant threat to NFLX

Oh, by the way.......
Cup and Handle breakout  You can see it very well here on this 1 year chart.

[setravis]

Janney Mntgmy Scott initiates BBI with a Buy saying they believe BBI has a number of near-term and long-term growth opportunities tied to: store restructurings; increased demand for rentals in a tough economy; new pricing plans; cost savings; market share gains; and its five point distribution strategy. Furthermore, the firm says the limited coverage and high short position (~25% of the float) should create an opportunity for alpha as BBI successfully restructures.


52wk Range: 0.72 - 3.68
Volume: 2,025,727
Avg Vol (3m): 2,377,860
Market Cap: 314.22M
P/E (ttm): 20.38
EPS (ttm): 0.08
Div & Yield: N/A (N/A)

Technicals
Percentage Gainer

Last Price Quote is:
17.55%above 13-day MA
21.89%above 50-day MA
RS Rating: 47 

Fundamentals
Coverage Initiated: Buy

Key Data:
Market Cap (M): $314.22 
P/E Ratio: 28.48 
PEG Ratio: N/A 
Next Earnings: 03/05/2009
Last Analyst Rating: Buy