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Outerwall CEO Scott Di Valerio Resigns, Stock Plummets

Outerwall, parent company of DVD kiosk operator Redbox, said that Scott Di Valerio has stepped down as CEO and resigned from the board — pushing the stock down more than 11% in pre-market trading.

The company named Nora Denzel, a member of Outerwall’s board since 2013, as interim chief executive officer and said it would commence a search for a permanent CEO immediately. The company also disclosed that it currently expects low single-digit revenue growth for full-year 2015.

Di Valerio was appointed Outerwall CEO in April 2013, and previously had served as CFO since 2010. He stepped down as chief executive on Jan. 18 and resigned from the board effective Jan. 19, according to a company regulatory filing.

“To accelerate the progress we are making, the board believes that now is the right time for a leadership change,” Outerwall chairman Nelson Chan said in a statement. “Outerwall continues to capitalize on its market-leading brands to drive profitability and deliver value for shareholders, partners and customers.”

[UPDATE, 1:30 p.m. PT: Outerwall shares closed down 20.2% for the day, to $62.05 per share.]

The company’s Redbox unit last month raised the daily rental prices of DVDs and Blu-ray Discs, which Outerwall said would have an “adverse impact” on rental volumes — and analysts predicted could shift market share away from Redbox. As of Dec. 2, 2014, the daily rental rate for DVDs increased from $1.20 to $1.50, and the daily rental rate for a Blu-ray Disc will increase from $1.50 to $2. Redbox raised rates after a series of renewals with studios for DVD rentals.

That came after Outerwall and Verizon in October pulled the plug on their joint streaming venture, Redbox Instant by Verizon, after it failed to gain traction.

On Tuesday, Outerwall said it currently expects consolidated revenue for the fourth quarter of 2014 to be approximately $598 million to $602 million, with adjusted earnings from continuing operations expected to be approximately $140 million to $142 million.

Outerwall is slated to report Q4 2014 results on Feb. 5, 2015, after market close.

Bellevue, Wash.-based Outerwall, in addition to its network of Redbox movie and game rental kiosks at 35,000 locations, also operates Coinstar money kiosks and ecoATM electronics recycling kiosks.

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