Blockbuster (NYSE: BBI) announced first-quarter earnings on Thursday, and while it beat the market's expectations, I can't say I'm terribly excited. Revenues decreased a little over 5% to $1.4 billion. Net income from continuing operations came in at $0.21 per diluted share. Briefing.com says that this performance was $0.06 better than Wall Street's average call. Revenues, however, missed expectations.

Why am I not excited about the performance here? I mean, not only did the bottom line trounce the wizards of Wall Street, but domestic comps increased 2.9%. Well, for one thing, the cash flow was nonexistent. Both operational and free cash-flow were negative; granted, the company used a lot less cash this time for operations, and the deficit in terms of free cash was much better, but still, I don't see any positive green.

Plus, there's just the general idea of Blockbuster itself. My feelings haven't changed since I last wrote about the movie-rental business and its earnings. I still believe that Netflix (NASDAQ: NFLX) and video-on-demand limit the upside potential of the company's long-term prospects (perhaps I shouldn't just say limit; maybe threaten is better terminology, who knows).

And then there's the issue of Circuit City (NYSE: CC). When management floats an idea like buying Circuit City, which I just don't believe is in the interest of Blockbuster and its shareholders since Blockbuster should just worry about getting its own house in order before worrying about eradicating the chaos from another house, I have to question the rationality of speculating on the business.

Yeah, I think I'll skip this three-dollar-stock for now. Too many problems going on with its fundamentals, too many disruptive shifts happening in the movie-distribution industry...

Disclosure: I don't own shares in any company mentioned in this article; positions can change at any time.