Thursday, June 19, 2008

Sinking Ship at Blockbuster?

While Blockbuster, Inc (BBI-$2.79) currently has sufficient liquidity to meet its cash obligations, the company is at risk of potential covenant violations in 2009, according to Moody's analysts.

"Companies with weak business models—like Blockbuster—face pressure on both revenue and on operating margins - calling cash-flow generation, or even survival, into question," Moody's analysts wrote in a report on 102 U.S. retailers.

Like the remake of the Poseidon Adventure, the original version is often better.

Regular readers of the 10Q Detective know that we scooped Moody's on BBI's outlook,
warning investors of the video retailer’s liquidity crisis back in early May. Unlike Moody’s, we do not charge for our advice.

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