Earnings Preview: Blockbuster to report 1Q results

OVERVIEW: Blockbuster reported in March that its fourth-quarter profit more than quadrupled as it cut costs and adjusted prices for its online subscription service. The company also said it would restate financial results over the past three years -relatively minor adjustments estimated at a few million dollars.

That same month Blockbuster said its board adopted a policy to give shareholders a nonbinding advisory vote on executive compensation. The vote, which will be held at each annual meeting beginning in 2009, will allow shareholders to advise the board on whether the pay packages of top executives should be ratified.

BY THE NUMBERS: Analysts surveyed by Thomson Financial predict net income of 15 cents per share on sales of $1.44 billion.

ANALYST TAKE: Jeffrey Logsdon of BMO Capital Markets said in an April 25 client note that Blockbuster's turnaround efforts have been helped by lower expenses. He was also pleased by pricing changes for its Total Access plan.

Total Access is Blockbuster's hybrid online and in-store video rental plan, which lets customers rent videos online that are then mailed to them but which can be exchanged in Blockbuster stores for other rentals.

The analyst expects a first-quarter profit of 13 cents per share on revenue of $1.48 billion. Logsdon anticipates flat quarterly rental revenue and retail sales growth of 1 percent, with online subscriber levels falling by 100,000 to 3 million.

He reiterated a "Market Perform" rating and $3 price target on the stock.

WHAT'S AHEAD: Last week Circuit City Stores Inc. said it would open its books to Dallas-based Blockbuster and its largest shareholder, Carl Icahn. Icahn said he would buy the consumer electronics retailer on its own if Blockbuster doesn't find financing.

Blockbuster had previously announced a takeover bid of just over $1 billion for Circuit City with plans for creating a huge chain that would sell electronic gadgets and rent movies and games.