Coinstar 2Q Profit Doubles On Redbox Gains

Date : 07/28/2011 @ 4:54PM
Source : Dow Jones News
Stock : Outerwall Inc. (MM) (OUTR)
Quote : 52.0  0.0 (0.00%) @ 2:05AM

Coinstar 2Q Profit Doubles On Redbox Gains

CAPSTAR FINANCIAL HOLDINGS, INC. (NASDAQ:CSTR)
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Coinstar Inc.'s (CSTR) second-quarter profit doubled as the company's Redbox vending machines continued to drive higher sales.

Coinstar on Thursday also projected a third-quarter profit of 83 cents to 93 cents a share with revenue between $450 million and $470 million. Analysts polled by Thomson Reuters had expected 86 cents a share and $469 million, respectively.

Shares were still down 2.6% at $50.01 after-hours Thursday. The stock was off 9.1% this year through the close.

Coinstar's Redbox DVD-rental business has quickly expanded over the past few years after its parent sold ancillary operations to focus on its movie-rental and coin-counting operations. The company has for months called digital delivery a priority as well but hasn't yet detailed its strategy for the move, which would more directly compete with rival Netflix Inc. (NFLX).

The company is meanwhile searching for a new head of the fast-growing Redbox segment after President Mitch Lowe last week resigned to pursue entrepreneurial and other interests.

Coinstar posted a profit of $26.7 million, or 83 cents a share, in the quarter, up from $13.4 million, or 41 cents a share, a year earlier. Earnings from continuing operations reached 98 cents compared with 39 cents a year ago. Revenue increased 27% to $435.2 million.

The company's raised earnings outlook last week projected 96 cents to $1 a share, while its narrowed revenue forecast called for $434 million to $436 million.

Operating margin widened to 13.4% from 8.6% as the Redbox segment better leveraged expenses and benefited absent a prior-year charge.

Revenue from Redbox, the company's biggest top-line contributor, grew 34% to $363.9 million as coin-services revenue climbed 1% to $71.1 million.

 
   -By Drew FitzGerald, Dow Jones Newswires; 212-416-2909; Andrew.FitzGerald@dowjones.com 

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