Coinstar Raises Financial Forecast As Redbox DVD Rentals Beat Expectations

Coinstar shares are up more than 13% in after-hours trading after the owner of Redbox said that the kiosk rental business continues to thrive after the October price increase for a DVD to $1.20 a night from $1. As a result it says that Q1 revenues could exceed $569M vs the maximum of $555M it projected in February. And earnings per share now are expected to go as high as $1.66, up from the earlier forecast that topped out at 91 cents. For all of 2012, the company now forecasts that revenue could reach $2.28B vs the earlier prediction of $2.25B. EPS now is expected to go as high as $4.80 as opposed to $4.30 in the February forecast. Redbox says that rentals have been especially strong for recent titles including Moneyball, Puss And Boots, 50/50, In TimeAbduction and Mr. Popper’s Penguins. The company also took a subtle swipe at Warner Bros, which stopped selling DVDs to Redbox after January. The kiosk company refused to accept a 56-day delay on new titles — twice as long as the waiting period in the previous deal. Since then, Redbox has bought Warner discs directly from retailers. That was expected to raise Redbox’s costs. But it said today that it “realized lower than expected direct operating costs…due to increased efficiencies in obtaining select content through its workaround process.” Universal didn’t follow Warner’s lead, and signed a two-year deal that only requires Redbox to wait 28 days for new releases. Coinstar says that contributed to its decision to raise its financial guidance for the year.

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