Coinstar's stock dropped 24 percent Thursday after disappointing sales at its redbox DVD-rental kiosks forced the company to lower its earnings estimate for the fourth quarter.
According to the Seattle Times, Coinstar officials said holiday revenue was surprisingly low partly because of delayed access to Hollywood's newest releases.
The Bellevue company is subject to a 28-day delay in receiving the latest DVD releases from movie studios, giving them a four-week window to sell their latest movies before offering them for rental in redbox kiosks.
While kiosk traffic remained strong, people rented fewer DVDs with each trip, and revenue was far below expectations, according to the story.
Company officials said they expect to report fourth-quarter revenue of $391 million. They had initially forecast $415 million to $440 million and now estimate earnings per share of 65 to 69 cents, rather than the previous 79 to 85 cents.
The revised estimates, announced after the stock market closed Thursday, pushed shares down $13.80 to $43.15 in after-hours trading — the biggest drop in more than a decade. The stock had closed the regular session off 28 cents at $56.95.
