Blockbuster Reports Wednesday: 37 Cents or Bust

Wall Street has not been kind to ol' Blockbuster Inc. (NYSE:BBI) and Friday BBI shares closed at 37 Cents.  That makes a five year 95% decline in share price for Blockbuster, if only the company could 'rewind' to the good times, but Netflix (NASDAQ:NFLX) and Coinstar's (NASDAQ:CSTR) Red Box kiosks have overrun the once video-all giant.

Either the story gets worse or better for Blockbuster this week as the company reports Q4 2009 Earnings on Wednesday (2/24).

Analysts are not expecting stellar numbers this week from Blockbuster, the Street expects the company to lose around 14 Cents in Q4 which is almost 40% of their current share price.  Blockbuster really lowered expectations when the company announced last month expected EBITDA for 2009 should range between $195 to $205 million which comes out to a net loss of $183 to $193 million. 

Blockbuster's December efforts to load up on inventory and ramp up its marketing budget failed to drive holiday sales. The company reduced its guidance for all of 2009, and the retailer is back in cost-cutting mode in 2010.  Several top executives were recently laid off.

BUT WAIT, THERE'S MORE
S&P cut Blockbuster's (BBI) corporate credit last week rating two steps to CCC, eight steps below investment grade, and assigned the company a negative outlook, indicating an additional downgrade may be likely over the coming 12-to-18 months.

"The negative outlook reflects our expectations for performance to likely remain very weak for at least the near term and for credit metrics to deteriorate substantially," S&P said in a statement.

Blockbuster's debt has been volatile since the company warned in January that its fourth-quarter and fiscal 2009 earnings would be sharply lower than expected, causing its bonds to halve in value.

Come this Wednesday its make it or break it time, best of luck playing the call and we'll see if Blockbuster either goes bust or moves away from being just another penny stock.