NEW YORK — Investors trashed Viacom Inc. stock Wednesday, selling it down nearly 10% in reaction to analyst warnings that the entertainment conglomerate’s earnings in the first and second quarters would be less than expected.

Viacom execs have been warning Wall Streeters that Blockbuster Entertainment Group had a rough first quarter, suffering flat sales growth at its stores, which translates to lower cash flow for Blockbuster. A Viacom spokesman declined to comment, but people close to the company confirmed the warnings, which sent Viacom stock closing down $3.37 to $32.50.

While Viacom has made a habit of lowering expectations among investors and analysts about its quarterly earnings over the past 18 months, the latest estimate downgrade had a stronger than usual impact because it prompted a longtime bull on the stock — Merrill Lynch analyst Jessica Reif — to downgrade it for the first time. Several other analysts put out notes without downgrading.

“Most investors are disgusted that the numbers are coming down again,” Reif said, noting that similar revisions had occurred “many times in the last few quarters,” but she had “stuck with it” through those periods.

“What has prompted us this time, she added, “was the recognition that stocks don’t go up when estimates go down.” Reif reduced her projection for Viacom’s 1997 cash flow growth from 12%-13% to 9%, and said in her note Wednesday that cash flow in the first quarter, which ends March 31, would fall 13%, compared with her prediction of 7.8%.

People close to Viacom say Blockbuster’s restructuring plan is “on track,” but that the first quarter performance was hurt by unseasonally warm weather, which reduces video rentals, and poorer product on the shelves. Indeed, analysts say same-store sales growth was up in January, but down in February and the first half of March.

Same-store sales growth — which measures growth at Blockbuster’s outlets adjusted for new store openings through the year — is the “bedrock of earnings,” one analyst said. “Fluctuations on that front are going to affect the stock.”

Lehman Bros. analyst Larry Petrella said questions about Blockbuster’s prospects were “continuing to punish the stock … dominating the valuation of the whole company (Viacom) even though it’s only part of the company.”

Blockbuster is not the only problem area, analysts say. MTV Networks, which has been the engine driving growth in the past year even as Blockbuster’s growth has slowed, is facing a slowdown in its growth, although analysts said it will still do well.

Reif also predicted that Viacom’s filmed entertainment group would suffer a 34% decline in first-quarter cash flow because last year’s first quarter had a $100 million contribution from the Kirch Group rights deal.

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