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Why Blockbuster's News Is Lackluster


Company faces an uphill battle against Netflix and Coinstar.


Minus the downpour on Saturday, it turned out to be a pretty good weekend. We had a family party to go to, and we got my oldest kid's soccer game in. We also went pumpkin- and apple-picking, which was fun, too.

Asian stocks ended mixed. The Hang Seng was up 0.26%, but the Nikkei was off 0.59%. However, European stocks were in positive territory early this morning. And here in the US, we're currently trading higher.

Here's what I'm focused on this fine Monday morning:

The latest is that Blockbuster closed on a $675 million debt offering. And in the press release, Jim Keyes, its chief executive said:

"The completion of the $675 million Notes offering is another important milestone for Blockbuster. We are pleased with this expression of investor confidence in the sustainability of our business model. This will enable us to increase our points of presence and expand the depth and breadth of product selection and convenience across all of our channels. Blockbuster is well positioned to continue our transformation into a multi-platform provider of media entertainment."

But this doesn't make Blockbuster a must-see flick.

1. I'm not saying the company can't eventually turn lemons into lemonade, but it faces an uphill battle, given the popularity of Netflix (NFLX) and the convenience of Redbox (CSTR).

2. Say what you want but that $1-and-change stock price is more of a liability than an asset these days.

3. I'd like to see officers and executives buck up in the open market. That would go a long way toward lifting shareholders' spirits.

4. While I like Netflix better from an investment view, it makes sense to proceed with caution, given the fact that it's trading at nearly 25 times the $1.80 a share estimate for this year.

Pepsi (PEP):
The drink-maker's stock got a nice shot in the arm on the heels of Deutsche raising its 2010 estimate.

Some thoughts:

1. Clearly the Deutsche news is good for Pepsi shareholders. But I'm optimistic about Coke's (KO) and Dr Pepper Snapple's (DPS) chances too, given the economy's improvement. I know I find myself going out and spending more these days. And when we hit the restaurants, chances are that someone in my family is ordering a soda of some sort.

2. With regard to Pepsi, the current-year estimate is $3.71, but there could be some upside to that number.

3. But why aren't executives bellying up in the open market with the economy on the mend?

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No positions in stocks mentioned.

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