Coinstar Inc. (CSTR:US), owner of the Redbox movie-rental kiosks, named Chief Financial Officer J. Scott Di Valerio to be chief executive officer after the unexpected retirement of Paul Davis. The shares declined.
Di Valerio will assume the new role after Davis, 55, retires on March 31, Bellevue, Washington-based Coinstar said yesterday in a statement. Galen Smith, senior vice president of finance at Redbox, will succeed Di Valerio as CFO.
The changes come as Redbox and partner Verizon Communications Inc. (VZ:US) prepare for the commercial debut of Redbox Instant, a service that combines access to Redbox DVD rentals with the ability to stream movies online. Coinstar also is rolling out Rubi, a line of gourmet coffee vending machines. While Davis’s retirement was a surprise, the company’s strategy is unlikely to change, said Eric Wold, an analyst at B. Riley Caris in San Francisco, who recommends buying the shares.
“It’s somewhat of a disappointment in terms of how strong Paul Davis was in positioning the company for growth going forward with new businesses,” Wold said. “I don’t expect any major changes in their trajectory. They all agreed on the direction the company was taking.”
Redbox Instant, now in a public beta test, is scheduled to start in the first quarter.
Davis decided to retire after completing several key deals, including the partnership with Verizon and the sale of underperforming businesses such as one that sold prepaid cards for mobile phones, Marci Maule, a company spokeswoman, said in an e-mail.
Coinstar also expanded last year into the sale of tickets to concerts and sporting events.
“Paul accomplished what he set out to do and decided it’s the right time to retire,” Maule said.
Coinstar also said fourth-quarter earnings, excluding some items, will be at or above the high end of its Oct. 25 forecast of 62 cents to 77 cents a share. Revenue will be within the previously announced range of $552 million to $602 million.
The stock fell as much as 5.9 percent to $48.97 yesterday following the announcement, which was released after the markets closed. Coinstar slipped 0.9 percent to $52.05 yesterday in regular trading and gained 14 percent last year.
Investors probably are looking for more clarity on any change in the company’s plans, Wold said of Coinstar’s drop.
Davis, who joined Coinstar in 2008 as chief operating officer, will leave the company’s board in March when he retires, according to the statement. Di Valerio, 50, has been CFO since 2010 and also oversaw the company’s information technology and supply chain operations.
“Scott’s appointment as CEO is a direct result of the board’s long-time focus on developing a deep management team and ensures that Coinstar will continue to benefit from strong leadership,” Chairman Deborah Bevier said in the statement.
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