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Outerwall to cut 8.5 percent of workforce, Redbox chief leaves

Customers rent DVD movies from a redbox video kiosk in Burbank, California, May 8, 2011. REUTERS/Fred Prouser
Customers rent DVD movies from a redbox video kiosk in Burbank, California, May 8, 2011. REUTERS/Fred Prouser

(Reuters) - Outerwall Inc said the president of its Redbox video rental kiosks division had left the business after just over a year and that it would cut 8.5 percent of its workforce.

The company, giving no reason for Anne Saunders' departure, said it expected to fill the position in the coming months.

Redbox, which competes mainly with Netflix Inc, contributes more than 80 percent to Outerwall's revenue.

Redbox offers self-service movie rentals at about 43,700 kiosks, where consumers can rent or buy movies and video games.

Outerwall, earlier known as Coinstar, bought Redbox in 2008. Saunders was appointed president of Redbox in August last year.

Outerwall said eliminating 251 jobs was expected to help it save about $22 million annually, beginning in 2014. The company said it expected to take a pre-tax charge of about $5 million in the fourth quarter related to the job cuts.

Outerwall also said it planned to discontinue three of its new ventures - Rubi coffee kiosks, Crisp Market food kiosks and Star Studio photo booths.

The company had said in June 2012 that it would launch Rubi kiosks to sell Starbucks Corp's Seattle's Best Coffee and roll out about 500 kiosks by the end of last year.

Outerwall said it would take a one-time, pre-tax charge of $26 million to $29 million in the fourth quarter related to the discontinuation of these ventures.

The company also raised its full-year adjusted earnings forecast to $5.44-$5.59 per share from $4.89-$5.04. Analysts were expecting $4.85 per share, according to Thomson Reuters I/B/E/S.

Outerwall shares closed at $64.93 on Monday on the Nasdaq.

(Reporting by Chandni Doulatramani in Bangalore; Editing by Kirti Pandey)

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