Lackluster Blockbuster will try to regain investor confidence with first-quarter results

Blockbuster hoping to ease worries with 1Q results

SAN FRANCISCO — The struggling video rental chain Blockbuster Inc. is scheduled to report its first-quarter results after the stock market closes Thursday. The following is a summary of key developments and analyst opinion related to the period.

OVERVIEW: Although Blockbuster lined up new financing to gain more breathing room, the Dallas-based company will be gasping for survival unless it can counter the threat posed by more convenient — and sometimes less expensive — ways to rent and buy movies.

Blockbuster, which started the year with about 7,400 U.S. stores, has tried to answer the challenge by developing its own version of Netflix Inc.’s DVD-by-mail service and acquiring technology that enables its customers to download video over the Internet to counter cable and satellite carriers as well as Apple Inc.’s iTunes store.

In another diversification move, Blockbuster is working with NCR Corp. to install DVD vending machines in its stores to appeal to consumers who prefer to get movies from kiosks set up in supermarkets and other retail outlets.

Blockbuster also has been selling more DVD players, video game consoles and other gadgets to shoppers.

The strategy has helped boost Blockbuster’s revenue during the past year, but it hasn’t stopped the losses that raised worries about the company filing for bankruptcy protection. The scare sent Blockbuster shares to a new low of 13 cents in March before management reassured investors by lining up new financing.

A $350 million credit line had been scheduled to expire in August before Blockbuster negotiated new terms giving it access to $250 million through September 2010.

The reprieve helped lift the company’s stock back above a $1, but Blockbuster remains on shaky ground. Its independent auditor, PricewaterhouseCoopers LLC, expressed “substantial doubt” about Blockbuster’s ability to remain in business in regulatory documents filed last month.

The company lost $374 million on revenue of $5.3 billion last year. To cut its losses, Blockbuster is trying to reduce costs by about $200 million in expenses by renegotiating store leases and trimming expenses in other areas.

Meanwhile, Netflix is thriving as more people embrace its Internet system for requesting DVDs that are delivered through the U.S. Postal Service. Netflix has added 1.6 million subscribers since September, giving it more than 10 million customers.

BY THE NUMBERS: Thomson Reuters didn’t find enough analysts covering Blockbuster to provide an estimate Blockbuster’s financial results for the three months ending April 5.

WHAT’S AHEAD: Smaller stores and outright closures appear likely as Blockbuster’s management adjusts to the new ways consumers are getting their entertainment.

STOCK PERFORMANCE: Blockbuster shares fell 33 percent to end its Jan. 5-April 5 quarter at 87 cents. The stock has traded in a range of 13 cents to $3.55 a share over the past year.