Blockbuster Cuts Costs, Beats EPS View

Blockbuster (BBI 0.89) surprised Wall Street by surpassing earnings estimates in its fourth quarter but said it will take a conservative approach with capital in light of market conditions.

Blockbuster reported fourth quarter earnings of $0.40 per share, $0.15 better than the First Call consensus of $0.25.

Revenues fell 12.1% year-over-year to $1.38 billion, short of the $1.52 billion consensus.  Blockbuster said the lower revenues reflect the negative impact of foreign currency exchange rates, a decline in the company-operated store base worldwide, and lower rental revenues from its by-mail rental service.

Blockbuster said it lowered its general and administrative expenses to $524.2 million in the quarter, down from $642.9 million in the same period last year.  "We remain cognizant of the constrained capital markets and our needs to reduce costs and maximize cash flow," said CFO Tom Casey.  "As a result, we intend to further reduce [general and administrative expenses] by over $200 million through significant ongoing cost reductions across all areas of the business, including compensation and lease costs."