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Netflix: A new world for video

"There are always stocks that can buck the trend and go up when most others are going down; one such issue is Netflix (NASDAQ: NFLX)," says Sean Broderick.

In Money and Markets, he explains, "Netflix has exceptional growth prospects as it ventures into streaming movies and games over the Internet.

"Netflix is doing bang-up business, and if history is any guide, should continue to do so. During the Great Depression, movies were one of the few growth industries, as a weary world turned to escapist entertainment.

"Netflix had an excellent recent quarter. Revenues jumped 19% and earnings rose 58%. EBITA, a widely used measure of a company's efficiency and profitability, hit a six-year high, and was up 18% over the year earlier.

Continue reading Netflix: A new world for video

Hollywood Video parent Movie Gallery files for Chapter 11 bankruptcy

Hollywood Video logoIt's a DVD-on-demand world; we just live in it. With customers increasingly turning to the likes of Netflix (NASDAQ: NFLX) and Blockbuster (NYSE: BBI) to get their film choices delivered directly to their homes, it's no wonder that traditional brick-and-mortar movie-rental chains are suffering.

Movie Gallery (NASDAQ: MOVI)Today, Hollywood Video parent Movie Gallery (NASDAQ: MOVI) -- the nation's second-largest video-rental chain, lagging behind only BBI -- said it would seek bankruptcy protection from its creditors. The retailer plans to reduce debt by $400 million. On its Chapter 11 petition filed Tuesday morning with the U.S. Bankruptcy Court in Richmond, Va., MOVI listed assets of $892 million and $1.4 billion in debt, citing increasing losses and building competitive pressures. The handwriting was on the wall in late September, when company CEO Joe Malugen said Movie Gallery would close 520 unprofitable stores to focus on 4,000 stronger locations.

Industry analyst Stacey Widlitz told Bloomberg: "I don't think bankruptcy will save [MOVI]. They have no edge versus the competition ... I think store closings will only accelerate." Another analyst with Wedbush Morgan securities noted that MOVI was "very slow to cut costs ... and that's what killed them."

Already in penny-stock territory, MOVI has dropped more than 17% today to hit a new annual low of 19 cents per share.

Beth Gaston Moon is an analyst at Schaeffer's Investment Research.

Symbol Lookup
IndexesChangePrice
DJIA+30.6910,464.40
NASDAQ+6.872,176.05
S&P 500+4.981,110.63

Last updated: November 27, 2009: 06:16 AM

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