By David B. Wilkerson

CHICAGO (Dow Jones) -- Blockbuster Inc.'s fourth-quarter sales at U.S. stores open at least a year rose 4.4%, driven by greater sales of video games, game merchandise and consumer electronics, the home-video chain said Thursday.

Dallas-based Blockbuster (BBI), which this week denied a report that it is considering a bankruptcy filing, said the same-store sales figure represents a signficant improvement from the fourth quarter of 2007, when it posted a 0.9% decrease.

The company will report fourth-quarter financial results March 19. It expects to take a non-cash goodwill impairment charge against results for the quarter.

Companies are required to estimate the book value of certain intangible assets such as brand names, reputation, and subscriber lists. During the past year, as the economic crisis has reduced revenues across most industries, the market value of these assets has declined. Accounting rules force companies to note the discrepancy between the book and market values and write down the difference.

Blockbuster has hired the law firm of Kirkland & Ellis LLP to assist it in financing efforts. The company has said it has the cash to fund debt through 2009 if necessary, but it's trying to secure refinancing to make a debt payment due in August.

The business faced serious challenges even before the worldwide economic collapse, which has made consumers more cost-conscious.

DVD-rental pioneer Netflix Inc. (NFLX) has cut severely into Blockbuster's market share over the past several years with its discs-by-mail service.

Blockbuster countered with an online offering of its own, which eventually evolved into Total Access -- a program that lets online Blockbuster customers return DVDs through the mail or redeem them at a store for more rentals.

Yet despite encouraging signals, Blockbuster's pullback in marketing spending and a price increase for Total Access ended up benefiting Netflix last year. Netflix had its most successful quarter to date in the final three months of 2008.

On Wednesday, analyst Scott Devitt of Stifel Nicolaus & Co. upgraded Netflix to hold from sell, saying a possible Blockbuster restructuring could "potentially redistribute a portion of Blockbuster's $2 billion in annual domestic movie-rental revenue amongst a small list of beneficiaries, including Netflix."

To a lesser extent, Blockbuster is also pressured by Apple Inc. (AAPL), which last year began to offer a movie-download rental service via its iTunes online store. Netflix offers downloads as well.

Advertising-supported online streaming of television shows at such sites as Hulu.com, Veoh.com, CBS.com (CBS) and other destinations has also diverted attention away from Blockbuster's core enterprise.

In response, Blockbuster made a controversial offer to acquire now-bankrupt retailer Circuit City (CCTYQ) last April, only to withdraw the bid after completing its due-diligence review.

Blockbuster operates more than 7,500 stores worldwide.