Blockbuster Stock Tanks After Comments
San Francisco, After Blockbuster CEO John Antioco said that the video-rental business is “in the tank,” Monday brought a 5% drop in the Dallas-based video-rental giant’s shares, reaching a 52-week low of $4.30. Antioco’s comments appeared in The Wall Street Journal. He also said that the Hollywood studios have a “legitimate reason to be concerned about the entire video business.”
In addition to Blockbuster, other rental companies also experienced a stock dive, including chief rival Movie Gallery and on-line-DVD trailblazer Netflix, a relative newcomer to the rental business.
Even though Blockbuster’s 40% market share is tops among U.S. video rentals, the company has increased spending considerably in order to compete with rising star Netflix and discount retailers such as Wal-Mart Stores. The company’s recent elimination of late fees stands as just one example of the evolving rental environment. Blockbuster estimates that the eradication of late fees cut its revenue by about $140 million in the quarter.
Radio Shack Ordered by Judge to Pay Overtime
Fort Worth, Texas, In a ruling in Chicago, a federal judge has ruled that several hundred RadioShack Corp. store managers are entitled to overtime pay. A class-action lawsuit was filed in 2003 against the Fort Worth, Texas-based electronics retailer, alleging that employees classified as exempt from overtime pay were, in fact, not exempt.
Even with this current ruling, the case is far from over. Another suit, also involving overtime nonpayment allegations, is pending, and an attorney for the plaintiff group said the number being carved out is “in the hundreds” and the amount due them is “in the millions.”
Starbucks CEO Sees Health-Care Crisis
Seattle, Starbucks expects to spend more than $200 million this year for health care for its 80,000 U.S. employees, more than the total amount it spends on the raw materials or green coffee it buys from Africa, Indonesia, and other countries, according to a report in the Thursday edition of The Seattle Times. Starbucks has been widely heralded for its policy of providing health-care coverage to employees who work at least 20 hours a week.
Starbucks CEO Howard Schultz made the comments in a meeting with Sen. Patty Murray and Rep. Adam Smith in Washington, D.C. He and other executives, including Costco CEO Jim Sinegal, were in the nation’s capital to attend a health-care summit. Schultz said his company has faced double-digit increases in insurance costs each of the past four years.
“It’s completely nonsustainable,” he said, in remarks quoted in the newspaper.
Schultz and the other executives are looking to bring attention to what they believe is a growing crisis threatening U.S. businesses. The Starbucks chief executive did not endorse any specific legislation, but he reaffirmed his belief that every American should have access to health insurance.