Blockbuster Inc, the video game rental chain, revised its earnings forecast for the fiscal year 2009 downward, citing weaker-than-expected rentals and sales during the holiday season.

The Dallas-based company now expects adjusted earnings between $195 million to $205 million for the full-year to January 3, which represents a net loss in the range of 183 million to $193 million.

Previously, Blockbuster had expected earnings before interest, taxes, depreciation and amortization to be in the range of $270 million to $290 million.

Blockbuster’s chairman & CEO Jim Keyes said that the company spent money in the 4Q to boost inventory and to purchase advertising to enhance holiday sales.

Speaking on the issue, he added, "In spite of these efforts, our performance during the holidays was well below expectations and anticipated adjusted EBITDA was affected.”

In the after-hours trading, shares in Blockbuster shed 12 per cent to 64 cents-a-share.