Coinstar, based in Bellevue, Washington, advanced 15 percent to $58.26 at 9:37 a.m. New York time, the biggest intraday gain since Oct. 29, 2010. Before today, the stock was up 11 percent this year, compared with a 6.9 percent gain in the Standard & Poor’s 500 Index.
The shares surged after the company yesterday reported the better-than-predicted results and the accord to buy NCR’s DVD business for as much as $100 million. Earlier in the day, Coinstar agreed to join with Verizon Communications Inc. (VZ) in a venture that gives the company a foothold in the fast-growing video-streaming field, along with its industry-leading kiosk business.
The agreements “really put us in a nice position, and we think it will help us expand,” Chief Financial Officer Scott Di Valerio said in an interview.
Fourth-quarter net income advanced to $31.5 million, or $1 a share, from $11.7 million, or 35 cents, a year earlier, which included a loss on discontinued operations, the company said in a statement. Analysts projected 65 cents, the average of 10 estimates. Sales rose 33 percent to $520.5 million, beating forecasts of $498 million.
With the NCR agreement, Redbox will acquire a DVD rental business that operated 10,000 vending machines as of November, along with software and services, Coinstar said.
In May, NCR sued a trust set up for Blockbuster Inc., sold to satellite TV provider Dish Network Corp. (DISH), to retain rights to the Blockbuster Express name used on the rental service.
NCR, based in Duluth, Georgia, rose 6.5 percent to $20.26 after gaining as much as 11 percent for the biggest intraday increase since December 2009.
The Coinstar-Verizon venture will offer video streaming along with rentals from Redbox’s kiosks, which currently total about 35,400. Redbox will take a 35 percent stake in the business, which will stream movies over the Internet to a variety of devices, according to regulatory filings today.
Coinstar will make an initial cash investment of $14 million into the venture and may add more, according to a regulatory filing. The companies may eventually contribute $450 million, the filings said.
This quarter, Coinstar forecast sales of $530 million to $555 million and profit of 76 cents to 91 cents a share, excluding contributions from today’s deals. Analysts were estimating 86 cents and sales of $518.9 million on that basis.
Redbox raised prices in October, boosting the charge for a standard DVD by 20 percent to $1.20 per day to cover increases in fees paid for debit-card transactions. The higher price for a single-day DVD rental and fewer than expected debit-card transactions contributed to the results, Di Valerio said.
The company last week rejected Time Warner Inc. (TWX)’s demand that Redbox wait 56 days before renting new Warner Bros. movie releases. Coinstar said it will get the videos from third-party suppliers and make them available as soon as they go on sale.
The company expects to get new videos into its kiosks within seven to 10 days of their release, Di Valerio said. Redbox will pursue only those Warner titles likely to attract consumers to the kiosks, Chief Executive Officer Paul Davis said on a conference call.
Redbox had waited 28 days to get videos from Warner under the previous deal. The unit still waits 28 days for DVDs from Comcast Corp.’s Universal Pictures and News Corp.’s Fox. Walt Disney Co., Viacom Inc.’s Paramount and Sony Corp. make their DVDs available for rental on the day of release.
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