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Coinstar Shares Plunge 8% As Q4 Profit Declines, Issues Weak Outlook

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Shares of Coinstar, Inc. (CSTR: Quote) plunged nearly nine percent in extended trade on Thursday after the automated retail solutions provider reported a profit for the fourth quarter that declined from last year, reflecting higher loss from equity investments and a rise in operating expenses. The company also provided weak guidance for the first quarter of fiscal 2013.

Meanwhile, core earnings per share from continuing operations topped missed analysts' expectations, while quarterly revenues missed their estimates.

"Our ongoing commitment to creating value for our consumers, our partners and, ultimately, our shareholders drove substantial progress on several growth initiatives that we outlined at the beginning of 2012, including Redbox Instant by Verizon, the launch of the Redbox Tickets pilot, Rubi coffee kiosks and our expansion into Canada," CEO Paul Davis said in a statement.

The Bellevue, Washington-based Redbox movie-rental kiosks operator reported net income of $22.89 million or $0.75 per share for the fourth quarter, down from $31.52 million or $1.00 per share in the prior-year quarter.

Excluding items, core earnings from continuing operations for the quarter was $0.93 per year, compared to last year's $1.03 per share. On average, 13 analysts polled by Thomson Reuters expected the company to report earnings of $0.73 per share for the quarter. Analysts' estimates typically exclude special items.

Revenue for the quarter increased 8.4 percent to $564.08 million from $520.46 million in the same quarter last year, but missed twelve Wall Street analysts' consensus estimate of $580.19 million.

Redbox revenue grew 9.6 percent to $488.33 million, primarily due to new kiosk installations, while coin revenues remained relatively flat with last year at $74.46 million.

Operating margin for the quarter contracted 200 basis points to 8.5 percent from last year's 10.5 percent. Total expenses spiked to $516.25 million from $465.80 million, total other expense nearly tripled to $14.03 million from $5.28 million in the year-ago quarter.

For fiscal 2012, the company reported net income of $150.23 million or $4.67 per share, higher than $115.0 million or $3.61 per share in the prior year. Excluding items, core earnings from continuing operations were $4.83 per share, compared to last year's $3.67 per share. Analysts expected the company to report earnings of $4.65 per share for fiscal 2012.

Net revenues for the full year grew 19.3 percent to $2.20 billion from $1.85 billion in the previous year. Street was looking for full-year 2012 revenues of $2.11 billion.

Looking ahead to the first quarter, Coinstar expects core earnings from continuing operations in a range of $0.77 to $0.92 per share, on anticipated revenues between $568 million and $593 million. Analysts currently expect earnings of $1.21 per share on quarterly revenues of $624.18 million.

For fiscal 2013, the company expects core earnings from continuing operations in a range of $4.91 to $5.51 per share, on projected revenues between $2.375 billion and $2.555 billion. Street is currently looking for full-year 2013 earnings of $5.15 per share on annual revenues of $2.51 billion.

"We made strategic investments across our business this year that we believe will generate new opportunities for growth as we move through 2013 and beyond," Davis added.

CSTR closed Thursday's regular trading session at $52.10, up $0.78 or 1.52% on a volume of 2.66 million shares. However, the stock plunged $4.53 or 8.69% in after-hours trading.

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by RTT Staff Writer

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