Blockbuster is up for sale, and bidders are welcome. If you have a little extra money, and you are looking to sink it into a company with a tainted brand name, a Chapter 11 filing, and no clear path for regaining its market footing, this may be your opportunity.
Seriously, the number on the table as of today is $290 million. Blockbuster is hoping to sell for at least that much. It is unclear exactly why anyone would want Blockbuster. Perhaps the purchasers are interested in liquidating the company.
How many scratched DVDs and barely touched Blu-ray discs does it take to add up to $290 million anyway? If Blockbuster can unload the used discs for an average of $5 a piece, they will need 58 million of them to hit the $290 million mark. That sure seems like a lot of used discs.
Blockbuster does have more than used video discs, however. Blockbuster has all of that overpriced candy, drinks, and popcorn. Do not forget about all of the stuffed animals, key chains, and those framed movie posters no one ever touches.
No one is sure what is going to happen to Blockbuster, but it looks like Blockbuster is moving ahead quickly. Probably, by the end of April, we will find out who is buying Blockbuster and for what price. After that, we will either be treated to a tremendous reincarnation/re-branding of Blockbuster or the most massive clearance sale of used DVDs, games, and movie-related merchandise the nation has ever seen.
The sad thing is that very few people care. Not many people were upset when Blockbuster went Chapter 11, and there will not be that many people upset if Blockbuster is transformed or liquidated. How often do you hear someone praising Blockbuster, or excited about making a trip to a Blockbuster store? It's pretty rare, isn't it? That is the real problem. Most people just do not care about Blockbuster anymore, and why should they?
Showing posts with label Chapter 11. Show all posts
Showing posts with label Chapter 11. Show all posts
9/23/2010
Blockbusted: Blockbuster Files for Chapter 11 Bankruptcy Protection
Blockbuster has filed Chapter 11. This is barely news, because we have all been seeing this coming for a couple of years. The reasons for the bankruptcy are fairly obvious: debt, outdated business model, alienated customers, constantly shifting pricing structures, unpredictable rental policy changes, tainted brand, etc. The question should not be, "Why did Blockbuster go Chapter 11?" but "How did Blockbuster stay out of Chapter 11 for so long?"
Now, what does all of this mean for you? If you are a common shareholder, you are probably about to get screwed and lose your investment. If you are a customer, things are less certain. Chapter 11 is a reorganization status. Blockbuster is not shutting down at the moment, but the company is likely to spend the coming months trying to restructure their organization into a profitable business. Look for a lot of store closings, changes in policies, changes in pricing, changes in store inventory, and changes in ways of doing business. (Wow! That sounds like business as usual for Blockbuster.) Maybe these changes will benefit the customers. Maybe the changes will be a big headache for customers. The good news is that you have choices. If Blockbuster changes in ways you do not like, just go somewhere else.
This Chapter 11 filing gives Blockbuster one last chance to get things right. If Blockbuster can take advantage of this opportunity, they might be able to figure out a way to please customers while being profitable. If Blockbuster cannot figure out how to rehabilitate their business model, then the eventual end of Blockbuster in inevitable. We will just have to wait and see.
Now, what does all of this mean for you? If you are a common shareholder, you are probably about to get screwed and lose your investment. If you are a customer, things are less certain. Chapter 11 is a reorganization status. Blockbuster is not shutting down at the moment, but the company is likely to spend the coming months trying to restructure their organization into a profitable business. Look for a lot of store closings, changes in policies, changes in pricing, changes in store inventory, and changes in ways of doing business. (Wow! That sounds like business as usual for Blockbuster.) Maybe these changes will benefit the customers. Maybe the changes will be a big headache for customers. The good news is that you have choices. If Blockbuster changes in ways you do not like, just go somewhere else.
This Chapter 11 filing gives Blockbuster one last chance to get things right. If Blockbuster can take advantage of this opportunity, they might be able to figure out a way to please customers while being profitable. If Blockbuster cannot figure out how to rehabilitate their business model, then the eventual end of Blockbuster in inevitable. We will just have to wait and see.
3/20/2010
What Happens to Your Shares If Blockbuster Files Chapter 11 Bankruptcy
If you have been following Blockbuster in the news, you have noticed the bankruptcy talk is really heating up again. Frankly, it is stunning Blockbuster was able to survive all of the way through 2009, but they made it somehow. Well, it is 2010 now, and Chapter 11 seems like it could easily be in the cards for Blockbuster.
If you are a Blockbuster shareholder, you have probably been whimpering each time you have checked your portfolio during the last six years, but things can still get worse. If you are one of the unlucky investors still hanging onto Blockbuster shares, be aware those shares could possibly become worth absolutely nothing. If Blockbuster enters Chapter 11 bankruptcy, the common stock (probably the type of stock you hold) will be worthless. You will have no way to recover your money, and you will not be entitled to shares in the reorganized Blockbuster. In short, you, the common shareholder, will be left holding the bag (an empty bag). If you are concerned about losing 100% of your investment in Blockbuster, consult with your broker as soon as possible and explore your options. Maybe you can cash in those shares and have just enough money left for a few DVD rentals at that little, struggling independent video store in your town.
If you are a Blockbuster shareholder, you have probably been whimpering each time you have checked your portfolio during the last six years, but things can still get worse. If you are one of the unlucky investors still hanging onto Blockbuster shares, be aware those shares could possibly become worth absolutely nothing. If Blockbuster enters Chapter 11 bankruptcy, the common stock (probably the type of stock you hold) will be worthless. You will have no way to recover your money, and you will not be entitled to shares in the reorganized Blockbuster. In short, you, the common shareholder, will be left holding the bag (an empty bag). If you are concerned about losing 100% of your investment in Blockbuster, consult with your broker as soon as possible and explore your options. Maybe you can cash in those shares and have just enough money left for a few DVD rentals at that little, struggling independent video store in your town.
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