Dallas-based Blockbuster faces delisting on the New York Stock Exchange if the company can't pull their stock price above $1. The stock currently sits around $0.28.
In a press release to investors, CEO Jim Keyes, said, "We intend to promptly submit a plan to the NYSE, which will outline the proactive steps we plan to take to remedy the Company's non-compliance by September of 2011."
If the NYSE accepts the plan, to be sumbitted by the April 16 deadline, Blockbuster may still be listed for 18 months. A portion of the plan may include a combination of Class A and Class B stocks into a single class, as well as a "reverse stock split," which would reduce the number of shares and increase the share price proportionately.
For example, to raise Blockbuster stock to above $1 a share, a four to one reverse stock split would take the four $0.28 valued shares and combine them into one share worth $1.12. To approve the process, investors will be called to vote on the plan at the annual shareholders meeting on May 26.
If Blockbuster is delisted from the exchange, it could be another sign the company is tumbling toward bankruptcy. In the annual report sent to the Securities and Exchange Commission last week, Blockbuster's grim reality is in focus; a loss of 17 percent in rental inventory, plans to elimate over 500 more stores in 2010, and no cash to put into advertising are issues facing the video giant.
Aggressive encroachment into the rental space from companyies like Netflix and Redbox have cut severly into Blockbuster's store based approach, so much so that new kiosk and online plans put out by the company have been touted to compete directly and reach new market potential. So far, Blockbuster's efforts haven't turned the company around -- and based on their current outlook, the efforts may be too little, too late.
