Coinstar

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Outerwall Inc.
FormerlyCoinstar, Inc. (1991–2013)
Company typePublic
Nasdaq: OUTR
IndustryEntertainment, DVD Rental, Coin Counting Machines, Mobile Product Recycling
FoundedBellevue, Washington,
United States (February 1991 (1991-02))
FounderJens Molbak
Dan Gerrity[1]
Headquarters
Bellevue, Washington
,

United States
Area served
North America & Europe
Key people
Erik E. Prusch (CEO)
ServicesRedbox DVD Kiosks, Coin Counting Services, Mobile Device Recycling, E-Payment Services
RevenueUS$ 1.85 billion (2011)[2]
US$ 209 million (2011)
US$ 104 million (2011)
Total assetsUS$ 1.48 billion (2011)
Total equityUS$ 531 million (2011)
Number of employees
1,800 (2008)[3]
SubsidiariesRedbox, Coinstar, EcoATM
Websitewww.outerwall.com

Outerwall Inc. (formerly Coinstar, Inc.) is an American company with a network of movie and video game rental kiosks as well as coin-cashing machines. The firm's original focus was the conversion of loose change into paper currency, donations and gift cards via coin counter kiosks. Outerwall operates Coinstar machines which deduct a fee for conversion of coins to banknotes, and Coinstar Exchange for gift cards. The company also owns the Redbox DVD rental service.

Outerwall's kiosks are in the front of stores (between the cash registers and the exit/entrance). Outerwall has more than 60,000 kiosks including a variety of services in the US, UK, Ireland, Canada, Puerto Rico and Mexico.

Outerwall also produces machines that provide prepaid credit cards, cellular phone cards, tickets to concerts, and e-payment kiosks. It is also developing kiosks for pharmaceutical dispensing.

On July 2, 2013, Outerwall started trading on the NASDAQ as OUTR, changing its name from Coinstar.[4]

History

The company was founded in 1991 as Coinstar, Inc. and is headquartered in Bellevue, Washington.

As Coinstar began rolling out units in the mid 1990s, the US Mint and Federal Reserve were heavily affected by the return of coins into the economy.[5] Outerwall, the Mint, and Federal Reserve started coordinating rollouts, and adjusted production rates of coins accordingly. Outerwall cooperated with the US Mint in the introduction of the Golden Dollar at the beginning of the millennium and encouraged people to use coins rather than notes.[6]

In February 2009, Coinstar purchased all remaining shares of DVD rental kiosk company Redbox for $175 million from McDonald's Corporation, making Outerwall the sole owner.[7] Prior to this, Coinstar and McDonald's each owned 47% of Redbox shares with various other parties owning the remaining 6%.

On June 28, 2013, shareholders voted to change the company name from Coinstar to Outerwall.[8]

On July 2, 2013, Coinstar acquired mobile phone recycling kiosk operators ecoATM, for $350 million (not including debt) and the company name was changed to Outerwall.[9]

On October 7, 2013, Barry Rosenstein's hedge fund JANA Partners filed a 13D on shares of Outerwall (OUTR) and disclosed a new 13.5% ownership stake in OUTR with 3,777,995 shares. The activist 13D filing indicated that JANA expected to talk with management—in particular, that they wanted to focus on "a review of strategic alternatives including exploring a strategic transaction, selling or discontinuing certain businesses, or pursuing a sale."[10] Subsequently, on December 9, 2013, Outerwall's former CEO, J. Scott Di Valerio, announced it would discontinue three new ventures and lay off 8.5% of its workforce.[11]

Coinstar kiosks

Former Coinstar logo, currently used exclusively for kiosks.
The new logo was launched in 2011.[12]

The typical Coinstar coin-cashing kiosk is green and the size of a large vending machine. They are located at grocery stores, drug stores, larger merchants, banks or other retail locations. The coin-counting service is available in the US (including Puerto Rico), Canada, Ireland and the UK.[citation needed]

To process coins, loose change is poured into the machine. In the United States, the machine accepts all denominations of coins from one-cent coins to one-dollar coins, its only restriction being 1943 steel cents and Eisenhower Dollars. When the machine finishes counting coins it issues a scrip, called a voucher, which the user can redeem at the place of business providing the coin-counting service at face value for currency. The same mode of operation and redemption is provided on those Coinstar machines situated in Great Britain, Ireland, Canada, and Puerto Rico.

The coin-counting processing fee, deducted from the total once coins have been counted, is 10.9% in the USA, 11.9% in Canada, 8.7% in Ireland and 6.8% in the UK. Some machines may offer a lower rate; in this case the store hosting the machine has subsidised the rate.

A newer service enables users to use their coins to buy a gift card from merchants without the usual fee ("no fee") — including such retailers as Starbucks, Amazon.com, Banana Republic, Gap, Regal Entertainment Group, Old Navy, iTunes, J.C. Penney, CVS Pharmacy and Overstock.com. Select grocery retailers, including SuperValu[13] and Stop & Shop are also participating in the "no fee" offers. If the user chooses the fee-free option, the machine issues a plastic gift card or, in the case of online merchants like Amazon.com, a voucher with a redemption code.

US and UK users also have the option of donating their change to a selected charity. By 2006, Outerwall has raised more than $20 million for charities including the American Red Cross Disaster Relief fund, Leukemia and Lymphoma Society and UNICEF's Trick or Treat program.[14]

Outerwall has processed more than 350 billion coins in its nearly two decades of operation, with an average transaction amount of about $38. The largest single transaction was $13,000 in pennies from a man in Alabama.[15]

Additional services

Many Coinstar machines in the US also sell prepaid products such as Green-Dot preloaded MasterCard. In the UK, gift cards are not available.

Outerwall has become a multi-national provider of services for the front end of retail stores. Services provided include coin counting, bulk vending, prepaid products (gift cards), money transfer and automated DVD rentals (via Redbox). In September 2009, Outerwall sold its entertainment business, which included skill cranes and bulk vending, to National Entertainment Network.[16]

Outerwall will also be coming out with additional services, including the ability to deposit coins directly into a personal bank account. A specific time frame for availability of this service has not been announced.

Competition

In some sections of the U.S., regional banks have begun offering free coin-counting services in the amount of a gift card.[17] Refunds are often given in cash rather than in the form of a gift card. In some cases, it is not even necessary for the customer to have an account at the bank; the free service is offered as a way to attract new business from individuals who are not current account holders. TD Bank's "Penny Arcade" coin counters were free and available to both customers and non-customers in many branches, but as of November 2010, the bank charges a 6% fee for non-customers to use the machine.[18] In May 2016, in the wake of a New York state lawsuit over accuracy, TD Bank said that it had suspended use of its Penny Arcade machines and would be removing them from all of its locations. [19]

Publicity

May 9, 2006 Outerwall sued rival Coin X change over a patent dispute around the use of voucher-issuing machines, remote reporting of the coin machines' status and anti-counterfeiting technology for printed vouchers.[20]

To generate publicity, Outerwall offered to cash in over 1.3 million pennies collected over four decades by Flomaton, Alabama resident Edmond Knowles after Knowles's bank refused to cash them in. The armored truck sent by Outerwall to Knowles's home sank into the mud in his yard after being loaded with the 4.5-ton collection, and needed to be rescued by a tow truck.[21]

March 14, 2008 an employee was arrested for stealing $441,000 from Coinstar machines in Washington, Oregon and California. The employee was accused of illegally accessing the Coinstar machine's cash boxes ahead of armored car pickups.[22]

March 25, 2008 Roy Disney used his Shamrock Activist Value Fund of Burbank to ask for changes in Outerwall's corporate governance.[23][24]

Name change

On June 28, 2013 shareholders voted to change the company name from Coinstar to Outerwall.[8]

On July 2, 2013 the company traded its first day as Outerwall, Inc., with its new ticker being OUTR.[25]

References

  1. ^ "All Business interviews Coinstar founder". Retrieved 2009-12-09.
  2. ^ "US SEC Form 10-K". Retrieved 2012-02-11.
  3. ^ "!company_name! - Company Profile from Hoover's".
  4. ^ "Outerwall To Celebrate Its New Name, Ticker And Logo At The NASDAQ Stock Market". Retrieved Oct 3, 2013.
  5. ^ "Penny Shortages in Mid-Atlantic States". 1994-06-04. Retrieved 2012-02-11.
  6. ^ "U.S. Mint Announces Program To Encourage Citizens To Re-circulate Coins". 2000-03-15. Retrieved 2011-02-11.
  7. ^ "Finance | paidContent". Finance.paidcontent.org. Retrieved 2009-08-01.
  8. ^ a b Rich Duprey (28 June 2013). "Coinstar Shareholders Approve Changing Name to Outerwall". fool.com. Retrieved 21 July 2015.
  9. ^ "Coinstar rebrands as Outerwall, acquires phone recycling startup ecoATM for $350M". VentureBeat. Retrieved July 2, 2013.
  10. ^ http://www.marketfolly.com/2013/10/jana-partners-goes-activist-on.html#ixzz2n6B8lFlV. Retrieved October 7, 2013. {{cite web}}: Missing or empty |title= (help)
  11. ^ http://variety.com/2013/biz/news/redbox-chief-saunders-out-outerwall-to-cut-8-5-of-workforce-1200940217/. Retrieved December 10, 2013. {{cite web}}: Missing or empty |title= (help)
  12. ^ UnderConsideration LLC. "Brand New: Coinstar, More Coin less Star". underconsideration.com. Retrieved 21 July 2015.
  13. ^ "Supervalu, Coinstar Ink New Agreement". Retrieved 2011-05-11.
  14. ^ "Transforming coins into donations using technology". Retrieved 2011-05-11.
  15. ^ Coin Operated. Modern Marvels. The History Channel.
  16. ^ "National Entertainment Network Acquires Outerwall's Entertainment Division". Retrieved 2011-05-11.
  17. ^ "Coinstar: Cash in coins. Sell gift cards". coinstar.com. Retrieved 21 July 2015.
  18. ^ Blumenthal, Jeff (2010-11-18). "TD Bank drops free coin counting for noncustomers".
  19. ^ Isidore, Chris (2016-05-20). "Horror! TD Bank dumping Penny Arcade coin machines".
  20. ^ "Business & Technology - Coinstar files patent lawsuit against Coin X Change - Seattle Times Newspaper". nwsource.com. Retrieved 21 July 2015.
  21. ^ Donn, Jeff (2006-07-07). "Do Pennies Still Make Sense?". In The Loop. Washington Post. Retrieved 2007-10-28.
  22. ^ "Coinstar thefts were inside job, court documents show". The Seattle Times. Retrieved 21 July 2015.
  23. ^ "Investment fund seeks Coinstar changes". The Seattle Times. Retrieved 21 July 2015.
  24. ^ "Coinstar proxy contest resolved". The Seattle Times. Retrieved 21 July 2015.
  25. ^ "http://finance.yahoo.com/news/outerwall-celebrate-name-ticker-logo-100000881.html". {{cite web}}: External link in |title= (help)

External links

Retrieved from "https://en.wikipedia.org/w/index.php?title=Coinstar&oldid=727177307"