The Dallas, Texas based video rental giant Blockbuster Inc (NYSE: BBI) has been under tremendous pressure over the past few years. From being one of the most sought after public companies on Wall Street to being reduced to a four-dollar stock. The company has seen better days, but at this point we need to take a look at the possibilities that can arise from the company being backed into a corner.

Back in March we pretty much saw Blockbuster in a dark place but there may be a silver lining there. Carl Icahn is a savvy businessman and even though Blockbuster is being sued by Netflix (NASDAQ: NFLX) for patent infringement of their online DVD rental business, there still may be a rabbit in his hat.

The company has already stated that they will be looking to eliminate some of the non-performing stores and by doing this it will eliminate those loses and actually have a positive effect on their balance sheet.

If Blockbuster takes the necessary steps to restructure the company properly it may be in a position to possibly seek acquisitions for additional growth. Some possible acquisition candidates or strategic alliance partners may include Netflix and Movie Gallery (NASDAQ: MOVI). Working a deal out with Netflix eliminates the lawsuit and will allow Blockbuster to reap the rewards that are present in Internet sales, while a deal with Movie Gallery would give them additional locations in areas that they do not have a heavy presence in.

So the key component for Blockbuster that we see is the expansion of their online DVD rental business, which they may be in line to do. So Blockbuster trading at $4.81 may be a memory as they company redefines itself in 2006.

Blockbuster closed at $4.89 on Wednesday.

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Louis Victor NAMC Newswire www.namcnewswire.com

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