Coinstar's Higher Guidance Raises Focus On Netflix (CSTR, NFLX)

Coinstar, Inc. (NASDAQ: CSTR) is raising its first quarter and annual earnings and revenue guidance.  The news is going to be particularly important for Netflix, Inc. (NASDAQ: NFLX) because of why the earnings guidance is being lifted.  It is all about Redbox and acceptance of a consumer price hike!

The company noted that the increase in revenue was “driven by stronger than anticipated consumer demand at Redbox throughout the quarter, particularly during February and March, reflecting, in part, better than anticipated consumer acceptance of the price increase for Redbox standard definition DVD rentals implemented in October 2011.”

Did you say better than anticipated consumer acceptance of the price increase??? 

If Redbox is getting higher sales on a static basis, that might not be good news for Netflix because it could mean more customer defections.  But… If Redbox is passing on higher costs without customers bitching all over the internet, then maybe Reed Hastings won’t get bashed so much for tweaking his price structures ahead again.  That debate will have to be settled based on the stock performance on Friday.

Here is a breakdown of the guidance:

• Consolidated revenue $567.0 million to $569.2 million, Thomson Reuters estimate is $537.66 million.
• Income from continuing operations $53.0 million to $54.3 million
• Core adjusted EBITDA from continuing operations $127.9 million to $130.1 million
• Diluted earnings per share from continuing operations $1.62 to $1.66
• Core diluted earnings per share from continuing operations $1.36 to $1.40

Thomson Reuters has a consensus target of $0.90 EPS.

For the year, Coinstar sees revenue between $2.155 billion and $2.280 billion and put earnings between $4.40 and $4.80 on a fully diluted basis.  Thomson Reuters has a consensus of $4.09 EPS and $2.22 billion in revenue.

Coinstar shares closed down 2.9% at $61.31 today and the shares are up a whopping 16% at $71.00 in the after-hours against a prior 52-week high of $65.00.

Netflix shares are still trying to judge how to react.  The stock closed up 4.4% at $104.26 today because of a positive analyst call and a strong market and the shares are only up 0.5% at $104.72 in the after-hours session.

JON C. OGG