updated 8/2/2005 5:23:45 PM ET 2005-08-02T21:23:45

The chief executive of Blockbuster Inc. warned Tuesday that the movie-rental company's second quarter was hurt by weak DVD releases that have cast doubt about the rest of the year. The company's shares plunged.

The warning by John F. Antioco in a presentation to Blockbuster investors came a week before Dallas-based Blockbuster, the largest U.S. movie-rental chain, is scheduled to release second-quarter financial results.

"Overall industry decline and continued poor theatrical performance had a negative impact on the second quarter and has created uncertainty about the balance of the year," Antioco said.

He said Blockbuster is "taking aggressive actions" in the second half of the year to cope with continued weakness in the rental industry.

Blockbuster has had a tumultuous year, capped by a successful proxy fight led by financier Carl Icahn, who criticized the company for spending too much. Icahn and two allies won seats on the board but retained Antioco as CEO and chairman.

Blockbuster has more than 9,100 stores around the world. The company still dominates the U.S. in-store movie rental business but faces competition online from Netflix Inc. and cheap DVDs from mass merchants such as Wal-Mart Stores Inc., plus video-on-demand and pay-per-view from cable and satellite TV operators.

Two weeks ago, the No. 2 U.S. chain, Movie Gallery Inc., reported that same-store revenue in the June quarter fell 5.5 percent from last year. Movie Gallery cut the number of new stores it plans to open this year from 400 to 300.

But Netflix reported last month that its second-quarter profit nearly doubled to $5.7 million after the company had forecast a loss, and revenue rose by more than one-third.

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