In this article in Seeking Alpha, Rick Newman highlights 15 companies that he thinks will not survive 2009. Given how much we have analyzed Blockbuster, are we surprised that it makes the list?
In our financial ratio analysis of Blockbuster it may be well worth our time to estimate some of the default probabilities. Perhaps this would be a good time to try out your eVal software and take a closer look at BBI's numbers?
Interesting article. For some reason “doom and gloom” articles always seem to be the most interesting. I wonder how much articles like this add to investor-fear. Clearly investor fear can drastically affect the health and even the life of a company—eg Bear Sterns. I wonder if legislation should be put in place that prevents publishers from flippantly predicting values of individual stocks; these predictions alone could prove the demise of many companies.
ReplyDeleteMost of the fifteen predictions weren’t exceptionally surprising. Every time I go in to a Rite Aid, I wonder how the company is still in business. It seems like nobody is ever there, yet they have similar PPE as most grocery stores do.
The reasoning that the article gave for Sbarro’s downturn was interesting. I had not previously considered the affect the economy would have on fast-food restaurants that are primarily placed within malls. Other fast-food businesses have not been as drastically affected, but it is logical that a company that is so closely linked with mall-based-retailers would be struggling more than other fast food businesses in the current economic climate.
The same thing is happening in the semiconductor industry where I work. Several big name companies are cutting back or shutting down production facilities because inventories are backing up.
ReplyDeleteWhen I go to Blockbuster, I notice that many of the popular new shows are always rented out. You almost have to go midweek. I think they are also loosing revenue to Redbox which rents for $1 and only has a few new releases. They don't have the building costs to support and are more conveniently located right next to the supermarket doors etc.
Stephen Mulvey