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Issue Date: Vol. 52, No. 2, February 2012, Posted On: 2/7/2012

Redbox Buys Rival NCR Corp.'s Kiosks for $100M; Coinstar Q4 Earnings Double

by Staff Reporter
vending, vending machine, automated retailing, DVD rental kiosk, Coinstar Inc. fourth-quarter earnings, Coinstar 2011 financial report, Redbox automated DVD rental business, NCR Corp., NCR DVD kiosk, Blockbuster Video, self-service coin-counting machine

BELLEVUE, WA -- Coinstar Inc. on Feb. 6 posted glowing fourth-quarter earnings with profits more than doubled, aided mostly by the growth of its Redbox automated DVD rental business.

On the same day, Coinstar said Redbox would pay $100 million to buy more than 10,000 kiosks from rival NCR Corp. And the company announced the formation of a partnership with Verizon Communications to provide nationwide digital download services. | SEE STORY

The NCR kiosk deal is subject to regulatory approval, but Redbox hopes to close it in the third quarter, at which time it will enter into a services agreement with NCR. Most NCR kiosks are branded as Blockbuster Video, which was purchased by Dish Networks last year. NCR owned the kiosks.

In its latest earnings report, Coinstar said it had a profit of $31.5 million, or $1 a share, for the fourth quarter, ended Dec. 31. That was up from $11.7 million, or 35¢ a share, in the same period in 2010. Revenue increased 33% to $520.5 million.

Revenue from Redbox, Coinstar's largest top-line contributor, jumped 40% to $445.6 million.

For the 2011 full year, Coinstar's revenue was almost $1.85 billion, an increase of 28.5% compared with 2010. Operating income for 2011 was $209.9 million, which resulted in an operating margin of 11.4%, compared with operating income of $143.2 million and an operating margin of 10% in 2010. Income from continuing operations for 2011 was $115 million, or diluted earnings a share of $3.61, an increase in diluted earnings per share of 77.8%, compared with income from continuing operations of $65.9 million, or $2.03 per share, in 2010.

Coinstar, known for its namesake self-service coin-counting machines prior to Redbox, believes the good times will continue to roll. The company projected 2012 earnings of $3.80 to $4.30 a share on revenue between $2.08 billion and $2.25 billion.

See Coinstar earnings release.

Coinstar was once the nation's largest operator of bulk vending machines and skill cranes, and managed equipment at public locations through its entertainment services division. The division, which also included coin-op videogames and kiddie rides, was sold in 2009. Coinstar's foray into coin-op began in 2004 when it purchased Louisville, CO-based American Coin Merchandisers Inc. (dba SugarLoaf Creations). That acquisition included Folz Vending, which ACMI had acquired a year earlier. | READ MORE

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