With red ink of $41 mil, Blockbuster stock sinks

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"The demise of Blockbuster has been greatly exaggerated," CEO Jim Keyes said Thursday while discussing second-quarter financial results.

Wall Street wasn't buying it, though, and shares of the movie-rental giant shed 10%.

Blockbuster said it lost $41.3 million in the quarter, up from a $34.2 million loss last year, when it had an $81.4 million gain from the sale of Gamestation. Even without Gamestation, revenue rose 3% to $1.3 billion.

Keyes complained that Wall Street mistreats Blockbuster each time a new movie-delivery system gains traction, and he promised that his company, too, will benefit from the emerging technologies.

Keyes also focused on the 8,000 stores that Blockbuster operates. While analysts consider them an albatross, Keyes called them a competitive advantage.

His proof was that Blockbuster managed to grow same-store sales in the U.S. by 14%, helped by DVD rental on that basis up 6% and merchandise sales "up huge," Keyes said.

Keyes added that Blockbuster is bracing for a weak DVD release schedule this month by adding "all things Batman" to store shelves, taking advantage of the success of "The Dark Knight." (partialdiff)
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