And the Winner Is...
By Jeff Clark
February 27, 2007
There's a reason they don't advertise beer, chewing tobacco, or tractors during the Academy Awards.
The Oscars are for women what Super Bowl Sunday is for men. And it's the one day each year that my wife insists on having absolute control over the big-screen TV.
Gabriela woke up early on Sunday morning, grabbed a bag of Quaker Rice Cakes and a mineral water, plopped down on the couch, and flipped on E! Entertainment Television.
After watching several hours of investigative reporting on topics such as "Who will she be wearing tonight?" and "What did they eat before the show?" my wife informed me that she had invited several girlfriends over to watch the Oscars.
So I did what any red-blooded American male would do under similar circumstances...
I fell to my knees and prayed that the pageantry would end in time to watch the ESPN highlight show. And then I drove over to my local Blockbuster to rent a movie.
Apparently, I wasn't the only one.
The shelves were almost empty. There were no new releases. There were no dramas. No suspense thrillers and no science fiction. All that remained were a handful of children's movies, a couple of comedies, and a horror movie or two. So I grabbed the last copy of The Three Amigos and a box of licorice and headed on home.
On the way home, it occurred to me that Blockbuster must be doing a booming business.
Blockbuster (BBI) was once a darling of Wall Street. The company's shares nearly quadrupled from January 2001 to December 2001. But then along came Netflix, and investors ran from Blockbuster faster than rats scurrying through a Taco Bell.
Competition from Netflix, Amazon.com, Wal-Mart, and video on demand nearly crippled Blockbuster. The stock, which peaked early in 2002 at just over $18 per share, bottomed near $3 per share just about one year ago.
But, as you can see from the following chart, the past 12 months have been pretty good for the stock...
Blockbuster introduced the "Total Access" movie rental program to compete more effectively with Netflix. The company trimmed expenses and strengthened its balance sheet. And BBI managed to generate profits in two of the past four quarters.
But Blockbuster is not out of trouble just yet. The company still has a boatload of debt, and management has yet to address the competitive threat of video on demand.
The stock's performance since October, however, is worthy of an Oscar.
BBI announces earnings before the market opens today. So I suppose we'll know soon enough whether investors will go home with the little gold statue, or whether they'll have to be happy just being nominated.
My wife now insists that we go to Blockbuster and rent best-picture winner The Departed. Who knows? Maybe after the earnings announcement, I'll insist that we buy the stock.
I'll let you know how it ends.
Best regards and good trading,
Jeff Clark
