Blockbuster (BBI) is a terrible company and stock. After perusing the third-quarter report, published Friday after the bell, I don't see any reason to modify such a rough statement.

Sorry about that, but what else can I say about a huge revenue decline and a wider loss coupled with a story that continues to deteriorate? According to the Q3 earnings release, Blockbuster experienced a 21% drop on the top line. On an adjusted basis, the company lost 20 cents per share, compared to 9 cents per share in the comparable period a year ago. Helping to drive this abject performance was a 14% contraction in same-store sales.

Netflix (NASDAQ: NFLX) is feeling a little heat from studios Time Warner (NYSE: TWX), News Corp. (NASDAQ: NWS), and General Electric's (NYSE: GE) NBC Universal. The major media companies would all like to make more money from Netflix's business model, according to BusinessWeek.

No one is really satisfied these days with the DVD industry. Growth in home video is no longer what it used to be. So content makers perceive a need to engage new strategies to offset the this lack of expansion. It would be nice if those strategies were confined to innovation in movie development and the reduction of project budgets. Instead, trying to negotiate more beneficial deals with distributors such as Netflix will probably be the focus of media execs.

Netflix (NASDAQ: NFLX) released its Q2 report on Thursday after the bell. You had to like what you saw. Revenues increased 21%. Total subscribers went up 26%. Growth in net subscribers on a year-over-year basis was impressive, as was the increase observed in the gross margin. Free cash flow was up. And now for the final piece of the performance puzzle: adjusted earnings per share increased 29% to 58 cents. Very good.

Consumers have really taken to the Netflix model. They love getting DVDs by mail. And Netflix has really done a job on its major competitor, Blockbuster (NYSE: BBI). No doubt about it, I'm sure a lot of Blockbuster shareholders are wishing they were invested in Netflix.

Netflix (NASDAQ: NFLX), a DVD-rental business that competes with Blockbuster (NYSE: BBI), was upgraded yesterday by Michael Pachter, an analyst with Wedbush Morgan Securities. He sees good tidings ahead for the company. He believes that Netflix will see higher margins and a healthy stream of earnings. His thesis centers on the fact that the subscriber base is likely to grow and that streaming movies will lower the cost of delivery.

Upgrades are tricky beasts. Ideally, an investor or, more likely, a trader, wants to be in the stock before the upgrade occurs. Buying a company after it's been upgraded requires a lot of due diligence. And you have to get over the fact that you might be buying at a high price.

You know you're probably looking at a tough business situation when the first thing you see on an earnings release is a pair of bullet points related to financing strategies that are clearly meant to show the reader that a company is getting its house in order.

Such was the case with Blockbuster (NYSE: BBI) and its Q1 report, which came out Thursday after the bell. Remember, this is the company that, not long ago, received a notice about its woes.

Liquidity is the name of the game these days for Blockbuster. Too bad it isn't the company's business model. As far as that goes, the video-rental chain is still having its difficulties. Revenues dipped 19% to $1.1 billion. On an adjusted basis, net income came out to 19 cents per share versus 21 cents per share in the year-ago period.

Netflix (NASDAQ: NFLX) did a spectacular job in Q1. The famous DVD-rental-by-mail entity issued its quarterly numbers on Thursday after the bell. On an adjusted basis, Netflix delivered 40 cents per diluted share. That represented bottom-line growth of over 70%. I guess movies truly are resistant to recessions, huh? Revenues advanced over 20%.

According to earnings.com, that 40-cent figure means that management destroyed expectations since Wall Street was looking for somewhere around 31 cents per share. I should point out, however, that I've noticed that some other sources listed the expectations as being a little higher than 31 cents. No matter, Netflix beat the bottom line.

Netflix (NASDAQ: NFLX) reported earnings for Q4 on Monday after the bell, and according to Trey Thoelcke's recap article, the DVD rental company blew past expectations. Wall Street was looking for $0.34 per share on a top line of $354.2 million. Well, Netflix delivered $360 million in net sales and $0.38 per share on the bottom line. That was an increase of 19% and 65% for the top and bottom lines, respectively.

Call me impressed. These are great numbers. In fact, Netflix added a net 718,000 subscribers in Q4. Last year at this time, the company added a net 415,000 subscribers. Now, let's look at the cash flow. According to the earnings release, Netflix is doing fine here, too. Free cash flow for Q4 more than doubled to $51 million. Free cash flow for the year also doubled to more than $94 million.

Blockbuster (NYSE: BBI), the troubled DVD-rental chain that competes with Netflix (NASDAQ: NFLX), reported earnings for the third quarter on Thursday. The top line decreased by a little under 3%, and the net loss per share was $0.08 on an adjusted basis, which was $0.07 better than expected. Okay, I suppose that's kind of cool from a certain angle. In fact, one analyst quoted in the piece had a good take on the company.

I, however, do not have a good take on Blockbuster. I am not bullish in the least. For one thing, it takes a lot to look past a net loss and say that there's something to the earnings story that goes beyond the bottom line. For another thing, the press release indicates that Blockbuster is not doing well in terms of cash flow. Management needed to use $18.2 million for operations during the third quarter, which was slightly more than the amount needed in last year's similar period. And as for free cash flow, that was negative $53.7 million in Q3 2008 versus negative $38.6 million in Q3 2007. This doesn't scream "Buy Blockbuster!", does it?

Another negative aspect to the story is that the gross margin went down by 70 basis points. I will give one bit of credit, however: same-store sales for domestic locations actually increased slightly over 5%, and worldwide comps expanded by almost 2%.

Netflix (NASDAQ: NFLX) had something of a flashy third quarter. The online DVD-rental company reported the numbers on Monday after the market closed. Revenues did well, rising 16% to $341.3 million. The bottom line, however, was an even better story. Earnings per diluted share on an adjusted basis rose 38% to 36 cents. How does this compare to Wall Street estimates? Beautifully, as analysts were looking for 34 cents per share. So management was able to deliver two extra pennies. It's cool when a company can go beyond the usual beat-by-a-penny routine, isn't it?

I applaud Netflix for its earnings data, but I can't say I'm a huge fan of its current cash-flow performance. Operating cash flow dipped nearly 6% to approximately $73 million. Free cash flow declined almost 28% to about $26 million. Looking at other numbers, I see that gross subscriber additions increased 18% on a year-over-year basis. Gross margin also improved.

Unfortunately, CEO Reed Hastings believes that the recession will negatively affect subscriber growth rates. Of course it will. At this point, every business, and more importantly to investors and traders, every stock is going to feel the wrath of the economy and the market bears. Sure, Netflix made deals with Disney (NYSE: DIS), Starz and Microsoft (NASDAQ: MSFT) that may help the company offset some of the economic realities out there, but I think the bottom line is that you'll have to be careful about buying Netflix at this point in time.

Are you an entertaining person? Are you a visual story teller? Can you capture an audiences attention and make them respond to you? If you think you have what it takes to create interest, incite and entertain, then there are options open to you. Don't just tell me you're an artist. Grab your video camera and prove it on Metacafe.

Metacafe is not just another video sharing website. Metacafe has something for you. Cold hard cash awaits the future producer of indie films. As of this writing, the top earning video on Metacafe has pulled $26,683. Note that it has taken about two and a half years to do that. Still though, that's not a bad return on less than four minutes of video. Other vid-clips on the site have generated between $3,000 and $8,000 for their creators. While not an amount that you could live on, it's still real money which could help pay the bills.

I myself have several ideas that I'd like to try in pursuit of Internet-based revenue generation. I do call myself an artist and I have the ability to make people sit up and take notice. What I don't have is a high-speed Internet connection...

I guess my gay version of Gumby will have to wait a while longer... and his pony pal Pokie will too.