Is Blockbuster the next Sirius XM radio?

March 18, 2010

Where there is blood it hardly requires any elaboration, there will always be sharks. Now that we all have our dorsal fin hats firmly screwed on – check this counter out on my periscope: Blockbuster (NYSE ticker: BBI). Let me give you the low down on this company – dying has to be an understatement when it comes to BBI – last night alone the beleaguered DVD rental chain’s shares gave up a whopping 25%!

Yes, my friends – we have been shadowing her along with the Germans. The rest will be racing to join in the kill – this means, I may have to fly to Germany after all.

It’s currently trading at USD$0.25 and I expect her to sink lower into loose change territory, possibly even as low as 5 cents – by the looks of it BBI is kaput. Even its management seem to be more preoccupied with making preparations for its own funeral than trying to send out SOS’s.

The word “bankruptcy” appeared some 2,030 times yesterday alone along side BBI – and to just in case, you’re in any doubt, that she’s going to die,  BBI is even filling for a 10-K with the SEC – in lay man’s language; that’s like asking for the priest to proceed with the last rites.

This story may sound familiar to anyone who once played Sirius XM Radio (Nasdaq: SIRI) when it was trading for loose change just around USD$0.05 cents – today, its trading around $1 – so you go and do the math. Will BBI be another come back kid ?

Well let me just be clear as far as investing is concerned; most people would rate BBI as a King Tut stock, it deader than dead – but I am not so sure the story with BBI is all cut and dried – you see I’ve been doing a lot of research into BBI (close to nearly 200 man hours in all) and what I see is something that could be worth something to other firms – the way I see it those other firms may just want a piece of BBI to retro-fit into their current business process to give them an extra zing – stands to reason why grow it from zero when you can just plug & play; the best part of it, it all comes cheapy cheap.

For example, we all know Amazon (Nasdaq ticker: AMZN)  has always been salivating to get a piece of the DVD rental action for years. Sure you can say physical rentals of DVD is going the way of chemical films; but I say as long as Hollywood keeps pumping out films there will always be plenty of demand for DVD’s. Otherwise how can you explain the current price of Netflix? I for one don’t buy the logic just because there are X,Y and Z number of computers out there; it necessarily means everyone is glued to them or using them – for all you most people are just using one or two apps– besides it’s a no brainer calculation; would you rather spend 30 minutes downloading a movie or just get a physical DVD in 30 seconds from a slot machine when you’re buying a pack of cigarettes? Get it?

So the way I see it; there’s a possibility that BBI could get a blood transfusion from a big firm that just wants one foot in the DVD rental market segment – but any fool can say that, the trick to making mad money is getting in before the biggies decide to pick and run with this stock – something tells me the time is not right yet.

Meanwhile keep BBI in your sights – my gut feel tells me she still has plenty more to give so let her bleed happily away – when the time is right, we will fan out and go for the kill.

Darkness 2010

P.S A few weeks ago I made a recommendation for Synovus Financial (ticker: SNV) – she’s rocketed some 30% and a bit; my feel is she’s starting to get the shakes and too many amatuers are gobbling her up, so we may have a bubble that’s ready to pop – so we are out. We are switching believe it or not to Citigroup, ticker: C – now I know I am probably going to get a whole lot of flak for this call, but the way I see it C is good as a defensive stock; C offers good protection and that’s very important as I believe the DOW is headed for another correction soon – so we will lock and load her / the returns will not be spectacular 5% tops, but she’s good to ride out the storm.

(WARNING: PLEASE NOTE THERE ARE ONLY UNMITIGATED LIES AND DISINFORMATION ONLINE, PLS TREAT ME LIKE A MENTALLY RETARDED PERSON AND WHEN INVESTING DO YOUR OWN RESEARCH. REMEMBER THE STOCK MARKET IS JUST A GLORIFIED CASINO. TRUST NO ONE. TRUST ONLY THE FACTS AND YOUR OWN RESEARCH)

Disclosure: The author has cut his position on SNV and currently has positions in Citigroup – he will be shadowing BBI for the kill.

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