Blockbuster Going Bankrupt?
Blockbuster shares dropped 29% on Wednesday upon word the video rental chain will file bankruptcy, according to THE HOLLYWOOD REPORTER. A year ago the companies stock plummeted 77% on the same kind of rumors.
Last year a spokesperson denied the rumors, but now the company's annual report mentions it several times as a possibility.
The company's problem is competing with the more nimble Netflix and Redbox, while addressing its $964 million debt obligation, which it must pay off $112.5 million of principal this year. To address the problem, Blockbuster has expanded in the areas, such as mail delivery, kiosks and online streaming, where its competition dominates. While it shut down 430 stores in 2009, it plans to shutter as many as 545 in 2010. Blockbuster still has 6,500 brick-and-mortar locations globally.
The company reported a Q4 loss of $435 million.