Reports of Netflix's death are exaggerated

Company posts better-than-expected results and shows that, despite all the drama, subscriber levels have stabilized.

By Jonathan Berr Jan 25, 2012 6:14PM
Shares of Netflix (NFLX) are soaring in late trading after the company rebounded from a series of embarrassing blunders last year and posted fourth-quarter results that were better than expected. 

Profit at the Los Gatos, Calif., company fell 13% to $40.7 million, or 73 cents a share, from $47.1 million, or 87 cents a year earlier. Revenue rose 47% to $875.6 million as the company was able to quell a customer revolt over an unpopular fee hike. Analysts expected profit of 55 cents on revenue of $857.89 million.

One great quarter won't earn Wall Street's forgiveness, but it sure is a good start. Among the good news in the quarter were stronger-than-expected increases in Netflix's video-streaming business. As of the end of the quarter, that business had 21.67 million customers, an increase of 220,000 from the third quarter.

Even the DVD rental business, which is fading, performed well.

Netflix shares rose nearly 14% in after-hours trading to $108.10.

The company said it saw fewer streaming cancellations, as well as a lower migration to DVD-only plans. "While DVD members declined sharply over the last two quarters, the weekly rate of DVD cancellations has subsided from peak levels in September," Netflix said in a statement.

CEO Reed Hastings still faces huge obstacles to future growth, including rising costs for content -- particularly as the company pushes into developing original and exclusive programs.

Rivals have seized upon miscues last year that caused 800,000 customers to quit the service Hastings founded in reaction to his poor treatment by Blockbuster. If he can rebound from his blunders, Hastings' strategy will be studied in business schools for generations to come.

Tags: NFLX
Jan 25, 2012 7:02PM
Despite what this has to say, as a Netflix subscriber, I'm still on the fence. I'm leaning towards leaving for Amazon as I've learned that Netflix only has 5 of the top 100 movies from 2011 and 10 from 2010 available. In addition, I'm getting tired of seeing the same movies come up when I browse the subject menus to find something to watch. Unless Netflix does something to resolve this, as time goes on I think  they're going to be a lot of other subscribers in the same boat. Netflix needs to start to look at keeping their current customer base happy with a good selection of movies and not worry so much about creating their own shows (which I haven't seen one that I'll watch) and worrying about expansion into other markets.
Jan 26, 2012 9:20AM
One week they write an article saying Netflix is done, the next it's coming other words, they have no idea.
Jan 25, 2012 7:08PM
I don't expect any decent movies from Netflix anymore, but I stay for their library of TV shows. If that goes, I go.
Jan 26, 2012 6:55AM
The reason things are starting to rebound is because Netflix is still a good deal. People are realizing this again.
Jan 26, 2012 9:54AM
I was in the group that kept the streaming and dumped the DVD delivery. But, I use the service a lot and am catching up with the content. The more you use the service the more you notice that it becomes progressively more difficult to find good content. I predict for myself, that in another year I will dump the program altogether.
Jan 26, 2012 5:45AM
Don't blame Netflix, blame content providers. They are against  Netflix, they want them dead. Starz will soon be gone too. Then they will have even less content, but Netflix has shifted its strategy . They are now creating they're own content, they really have no choice. I would pay double to get decent content, but everyone freaks out.
Jan 26, 2012 9:35AM
I just don't understand Netflix in general, especially the comments from the CEO last year. Their goal was to "phase-out DVDs." If that was the plan, why did half of my instant-view queue expire to DVD only? I canceled the DVDs during the price-hike, and with that I lost the opportunity to watch several movies and random TV shows (see Quantum Leap episodes 1-3, etc.) So if they actually do stop the DVD service, we will be left with a smattering of TV shows and B-rated movies?? Don't get me wrong, Netflix is still a better deal than cable for me, but I can do without the lies about phasing out DVDs.
Jan 25, 2012 8:23PM
I'll stay with Netflix for a while. I was tempted to join Amazon (I got a Kindle Fire for Xmas), but their selection seems even more paltry than Netflix's. Also, the blue ray that I have doesn't connect to Amazon, just Netflix. At some point, one of these guys will be the leader in content. Until then, I'll stick with Netflix.
Jan 26, 2012 10:05AM

Netflix has its limits but I tried Vudu and it has too many commercials and is unstable. I tried to look into Hulu and it's too expensive. From what I understand Amazon use contend from Netflix.


All in all and for the moment the best service is obtained from Netflix. They need to widen their selections but if we leave they wont be able to do it.


It's a dog eats dog world.

Jan 25, 2012 6:53PM
Hope the stock goes up even more and then I'd short it. The number of subscribers is one thing but one basic fact that came out the last few months will eventually drive the price way down. Netflix does not have the resources to compete with the big boys when it comes to buying content. So they have shifted toward developing their own shows. In short, they will become another "channel". While this model may become successful, I doubt it will generate the level of revenue that will hold the stock price up. They had a good thing while it lasted. I quit them years ago when it became near impossible to get a new release before the movie became available on cable.
Jan 25, 2012 9:57PM
Netflix owns 'nothing', zero assets, why do people buy their stock???  so they (big block purchasers) can flip it with no intent of long term growth.  Do you know when the big boys are gonna flip their purchase?
Jan 25, 2012 9:54PM
2012 beholds another price increase and an additional fee's not over yet. 
Jan 26, 2012 10:31AM
I love my Netflix service!  $16.94 a month and my new release dvd's come right to my door.  My kids love the shows available for streaming and I watch a few TV shows that I have missed in the past.  They have full season available and I can watch when I have time.  Granted their streaming movie selection isn't worth much, but that's why I use the dvd service.  Worth every penny in my opinion.  Quit hating on Netflix and move the anger to Hollywood.  They are the ones screwing the streaming possibilities.
Jan 25, 2012 11:18PM
NFLX shares are straight drama. way too news-traded. 
Jan 26, 2012 9:24AM
Get yourself a Roku and you can tie into all the services from Amazon to Netflix to Hulu and dozens of others.
Jan 26, 2012 10:16AM
So its a good thing to have less profits but more subscribers? I see, no wonder our stack market is messed up. You have all these short investors taking chances on companies like Netflix. No substance to their positive. Just hoping to con everyone into buying the stock so it will go up and they can sell and profit. Its the American way.
Jan 26, 2012 10:45AM
been with Netflix for 2 yrs now and very happy w/da service!  i only pay 21 a month and that's w/2 rentals each time, i now it went a little up but still a lot cheaper than cable!!  i bought the roku machine to get Netflix but you can also get several  programs for free, like Crackle, Popcorn, Drive Inn Movies, Old Classic in 3D, hubba, foxnews, FB, CNBC, etc. 
Jan 26, 2012 7:59AM
Jan 26, 2012 10:14AM
Too many new streaming Tech plays coming into the competition pipeline  for me. I don't see how Netflix can survive long term. I think their mistake exposed them to a lot of future weakness. Since I don't short - I'm out!
Jan 25, 2012 6:44PM



This week, another library of films evaporated.

The poor service in South America and UK is being avoided.


Is the source of your dubious information only from Netflix ?

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