February 22, 2009

FeaturedProfiles.com Stock Pick: Blockbuster, Inc. (BBI)

Stock Price: $0.40

Blockbuster Inc. is a leading global provider of rental and retail movie and game entertainment. The company provides customers with convenient access to media entertainment anywhere, any way they want it - whether in-store, by-mail, through vending kiosks or digitally downloaded directly to their family room or mobile device.

BBI is a speculative play that holds big potential as a premier turn-around play. Many investors have followed Blockbuster's troubles as Netflix and others have risen to take market share.

It is stunning that a brand name like Blockbuster could now be trading at under a $100 million market cap, specifically around a $77 million market cap. Blockbuster's CEO has even been quoted, "We must 'Adapt or Die.'

We believe BBI will adapt and they have already taken steps that we believe will lead to investor returns as 2010 progresses. BBI has entered the video self serve kiosk space, movie delivery through mail, digital delivery and has been closing underperforming stores and even attempting to renegotiate lease structures.

BBI earnings are due out on Wednesday, February 24th. We believe bad news is already priced in with the company revising fiscal 2009 guidance already. We believe we could hear more initiatives out of BBI on how they plan to continue to turn Blockbuster around.

The CEO of BBI, Jim Keyes helped turn around 7-Eleven.

If BBI can't complete this turnaround then it's a complete failure on the part of BBI's CEO and upper management. We're betting BBI turns it around and sees its stock price improve as prospects for Blockbuster improve.

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