Blockbuster company has been loosing big and already been beat to the punch. Blockbuster is having a difficult time in growing in its area because of arising of the new companies such as ; “Netflix” and “Redbox”.US same-store sales fell 15.9% and revenue dipped 18% to $1.08 billion compared to last year. Adding to these numbers, the company ended last year with $963 million of debt. For all those reasons, the company decided to close its 500 weakest stores and hopes to reduce expenses by $200 million. When they decided to close some stores, their aim is to equalize their losses to their total fixed costs. In other words, their prices drop below minimum average variable cost, that’s why they will minimize losses by shutting down.
Rhe chief executive of the company, Jim Keys, announced that the financial advisors of the company on their ways to increase the liquidity, including a possible recapitilisation. It means that the compnay needs to increase its assets in order to make it through 2010.
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