Blockbuster Hanging in There

Blockbuster CEO James Keyes continues to talk about a turnaround at Blockbuster (BBI) and about looking forward to better times.

But two weeks ago the company announced “significantly lower-than-expected” earnings for the fourth quarter. That Thursday the stock closed down 33 percent to 49 cents.

Forty-nine cents?!! In May of 2002 it was trading at over $29.

On top of the gloomy earnings announcement, just last week billionaire investor Carl Icahn, who lent the firm a lot of status because of his apparent faith in its future, resigned from Blockbuster’s board. He owns a significant portion of the company, 16.9 percent in class A stock and 7.7 percent in class B stock. The reason given for the resignation was rather benign: Icahn said it was because of Institutional Shareholder Services guidelines regarding the number of directorships a person can hold. The market seemed to take it in stride, with shares declining only 2.2 percent. But that was after the bloodbath of the previous week.

CEO Keyes is known for leading the turnaround at 7-Eleven. He has now been at the helm of Blockbusters for over two years. If anything was going to change for the better under his leadership, shouldn’t it be apparent by now?

One skeptic, who wrote back in 2008 that he had been with rival Netflix from almost the start, weighed in at that time with his perspective on Blockbuster. Considering his employer, one could expect a dissing of a rival, but the piece adds a new dimension to Blockbuster’s troubles.

Perhaps the firm should be given credit for being able to hang on for as long as it has in the face of a sea change in how people like to get their movies and while coping with game-changing technology.

But Reader, what’s your take on this? Does BBI have a chance? Or are the cards stacked too heavily against it? Any thoughts on what it might do differently to turn things around? It would be great to hear from Blue MauMau readers on this through their comments.

Read what Keyes has to say about these very questions on The Street.

The Street: Blockbuster CEO: We Must 'Adapt or Die'

Related:

Blockbuster five-year income statement