Blockbuster said Monday that it intends to reduce its inventory of VHS cassettes and increase the number of DVDs in its stores with the aim of getting DVD titles to account for 50 percent of its transactions by the end of next year. They now account for 20 percent. The public is not likely to be given the opportunity to buy up the discarded titles at bargain rates, however. Blockbuster said that it intends to destroy most of them and take a charge of about $450 million.
The strategy was applauded by analysts, many of whom have repeatedly said that shares in the Viacom-owned unit are undervalued. Barry Sosnick of the New York brokerage firm Fahnestock & Co. told Bloomberg News that Blockbuster is “putting a much more profitable product in place of a less profitable title.” Larry Haverty, an analyst at State Street Research & Management, added: “It’s a very positive move. They are taking stuff that is not producing income and getting it off the books.”
