DALLAS - Blockbuster Inc., the movie rental company, said Thursday its fourth-quarter profit more than quadrupled as it cut costs and adjusted prices for its online subscription service.
The Dallas-based company also said it would restate financial results over the past three years — relatively minor adjustments in the few millions.
Overall, 2007 was a money-losing year marked by a summer retreat in its online service that competes with Netflix Inc. But Blockbuster said it would return to profitability this year and earn $5 million to $25 million.
Its shares fell 31 cents, or 10.2 percent, to $2.73 Thursday. They have traded in a 52-week range of $2.66 to $7.30.
Blockbuster said it earned $38.1 million, or 18 cents per share, in the quarter ended Jan. 6, up from $8.3 million, or 4 cents per share a year ago.
Excluding one-time costs such as severance payments to laid-off workers, Blockbuster said it would have earned $54.9 million, or 26 cents per share.
Analysts, who usually exclude one-time items from their estimates, had expected profit of 18 cents per share, according to a survey by Thomson Financial.
Revenue rose 3.6 percent to $1.57 billion, beating analysts' forecast of $1.44 billion.
Sales at stores open at least a year, a key figure in retailing, rose 2.9 percent.
Chairman and Chief Executive James Keyes said the results show there's still life in movie-rental stores.
"There has been a lot of skepticism about the store format, but we believe they are underutilized," Keyes said in an interview.
Keyes said Blockbuster can boost in-store rentals further by keeping new releases on the shelves.
"Today, you'll find "American Gangster" in stock in virtually every store," he said. "That's a big change."
The company trimmed operating expenses to $723.9 million from $736.8 million a year ago. That was partly due to lower advertising spending on its Total Access online program.
Keyes said Total Access has 3.1 million customers, unchanged since the end of September. Netflix has said it gained 451,000 subscribers in the last three months of 2007, ending the year with 7.5 million.
Blockbuster raised prices sharply for online customers who also want unlimited free exchanges at the chain's stores. But it cut prices for many online customers who get movies only by mail and don't swap them for more DVDs in the stores.
Keyes said the company is continuing to test new pricing strategies, such as lower prices for one-day rentals, partly to compete with DVD-rental kiosks springing up in grocery stores. Another option, he said, would give customers the option of paying an extra annual fee to get lower pre-rental prices — he compared it to Costco membership.
Citigroup analyst Tony Wible said he was "excited" by the fourth-quarter results. He said Blockbuster was helped by "more rational" pricing for Total Access and store closings by its smaller rival Movie Gallery Inc., which is operating under bankruptcy protection.
For the fiscal year, Blockbuster said it lost $85.1 million, or 45 cents per share, compared to a profit of $39.2 million, or 21 cents per share, in 2006. Revenue edged up to $5.54 billion from $5.52 billion in 2006.
Blockbuster said it would restate past results downward by $1.9 million last year, $4.2 million in 2006 and $4.2 million in 2005.
The company also said it would report weaknesses in accounting for expense accruals and foreign currency exchange adjustments.
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