November 16, 2005, 12:00 AM

Despite tough times, Blockbuster expects online profits by 2007

Though the number of online subscribers remained virtually the same at about 1 million and the company posted a net loss of $491.4 million for the third quarter, Blockbuster Inc. is forecasting that its e-commerce operation will be profitable by 2007.

Though the number of online subscribers remained virtually the same at about 1 million and the company posted a net loss of $491.4 million for the third quarter, Blockbuster Inc. is forecasting that its e-commerce operation will be profitable by 2007.

For the third quarter, Blockbuster, No. 298 in the Internet Retailer Top 400 Guide to Retail Web Sites, reported total revenues of $1.39 billion, a decrease of 1.7% from total sales of $1.41 billion for the third quarter of 2004. The company also posted a net loss of almost $492 million for the third-quarter, compared with a restated net loss of $1.4 billion for Q3 2004.

But Blockbuster, which doesn’t break out its e-commerce sales, nonetheless says that Blockbuster.com is expected to become profitable within 24 months. “While Blockbuster Online experienced relatively slow growth in the third quarter of 2005, we remain committed to the online business and expect that Blockbuster Online will achieve its goal of two million subscribers by the end of 2006 and become profitable in 2007,” the company says.

Over the next year Blockbuster will reduce its operational expenses by about $150 million. But Blockbuster, which in March told Wall Street analysts that the company will spend an additional $70 million this year to accelerate the growth of the subscriber base for Blockbuster Online, expects to maintain its present spending on e-commerce. “We will continue to invest at approximately the same levels in Blockbuster Online,” the company says.”

Blockbuster will achieve e-commerce profitability through a mixture of multi-channel retailing, offering online customers more options to rent and own games and DVDs and other measures, the company says. “We will continue to pursue growth opportunities offered by online rentals and establish Blockbuster Online as a profitable business,” says CEO John Antioco.

 

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