Redbox's parent down 25% on warning

By Aaron Smith, staff writer


NEW YORK (CNNMoney) -- Coinstar Inc.'s stock price fell Friday as the owner of the movie rental service Redbox pays the price for lowering its earnings guidance.

Coinstar (CSTR) plunged 25% after the company lowered guidance for sales and profit late Thursday. The company cut its fourth-quarter sales forecast to $391 million, from its previously announced range of $415 million to $440 million.

The company also lowered guidance on earnings, to a range of 65 cents to 69 cents a share, compared to the previously announced range of 79 cents to 85 cents.

Coinstar provides "coins to cash" self-service kiosks, typically located in grocery stores, charging a fee of 9.8%. The company also provides financial services, like money transfers and prepaid debit cards.

But it's the Redbox unit, which provides DVD rental kiosks and competes with the online renter Netflix (NFLX), that's causing concern.

Redbox offers movies 28 days after their Hollywood release, and that delay, combined with higher prices for Blu-Ray discs, was the source of the lowered forecast, according to Chief Executive Paul Davis.

"This was Redbox's first holiday season with 28-day delayed titles and we underestimated the impact that the delay would have on demand during the fourth quarter," said Davis in a press release. "We also expected much better performance from Blu-ray and had purchased to a higher level of demand."

Davis added, "While consumer visits to the kiosks remained strong, the number of movies per visit, or basket size, was lower than planned."

Coinstar is scheduled to release its fourth-quarter results on Feb. 3. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 17,252.95 96.10 0.56%
Nasdaq 4,591.88 29.69 0.65%
S&P 500 2,009.85 8.28 0.41%
Treasuries 2.62 0.02 0.96%
Data as of 2:08pm ET
Company Price Change % Change
Bank of America Corp... 17.14 0.37 2.18%
Yahoo! Inc 41.98 -0.61 -1.43%
Apple Inc 101.95 0.37 0.36%
Citigroup Inc 53.72 1.33 2.53%
Microsoft Corp 46.62 0.10 0.21%
Data as of 1:54pm ET

Sections

The restaurant's red star logo was controversial among the Vietnamese-American community More

The Federal Reserve is probably not going to raise interest rates until the summer of 2015 at the earliest. More

Apple says it has addressed customers' privacy concerns. But its security record says otherwise. More

Immigrant entrepreneurs leverage connections abroad to boost international exports -- and non-immigrants could stand to learn from their tactics. More

Occupy Wall Street offshoot Strike Debt says it has abolished nearly $4 million in private student loan debt for students who attended Everest College, part of Corinthian Colleges. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.