Netflix slammed on growth worries

The company may not make its goal of adding 7 million domestic customers this year.

By Kim Peterson Jul 25, 2012 12:17PM
Updated 6 p.m. ET

Netflix
(NFLX) got hammered in trading Wednesday, with shares falling 25% after the company said it may not meet its 2012 subscriber goals.

In his quarterly letter to investors, CEO Reed Hastings said the company's goal of adding 7 million U.S. customers will be "challenging" if the company can't nail the upper end of its growth estimates in the current quarter. Wall Street already thought that number would be tough to hit, especially after Netflix gained only about 2.25 million U.S. subscribers in the first half of the year.

Post continues below.
The Summer Olympics will make it harder to get new customers, Hastings added.

His cautionary comments came after Netflix reported a second quarter that wasn't that bad. The company returned from a loss in the first quarter to a profit of $6.16 million, or 11 cents a share, a far better showing than the 5 cents a share analysts were looking for. Revenue rose 13% to $889.2 million -- about what analysts had expected.

The company said it would likely be profitable again in the third quarter but could head back into the red in the fourth quarter as it launches in a new, unnamed international market.

Netflix said it added about 530,000 streaming subscribers in the U.S. in the quarter to nearly 24 million. It added nearly the same number internationally, to 3.6 million total. But its by-mail DVD rental business lost 850,000 in the U.S. to 9.2 million.

In all, Netflix's customer base totaled 30.1 million subscribers worldwide.

Netflix said its goal for the current quarter is 1 million to 1.8 million domestic new subscribers. "If we finish Q3 in the high end of that range, we would remain on track for 7 million domestic net additions for the year; otherwise it would be challenging to achieve that goal by year end," Hastings wrote in his investor letter.

Netflix shares closed down 25% to $60.28 Wednesday. Shares have been extremely volatile over the past year, starting in September, when the company increased prices by as much as 60% for some customers. It briefly tried to separate its DVD business from the rest of the company and rename it Qwikster. The change angered customers and badly damaged the company's brand. Hastings estimated it would take three years for the brand to recover.

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Tags: NFLX
10Comments
Jul 25, 2012 3:15PM
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They screwed themselves with their enormous egos and greed.  When they very nearly doubled their prices by splitting the business into halves, everyone with any brains left them for dead and never looked back.
Jul 25, 2012 5:22PM
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If they want more subscribers...add more movies to instant stream especially new movies...bunch of morons complaining when they aren't listening to the consumer...yeah I have the instant stream and I enjoy it but I would use it more if newer movies and tv shows were added. I hate when these companies act like they don't know what to do when they aren't making boatloads of money...let them live like the common folk and see why we aren't paying for both streaming and mail discs. Idiots!!
Jul 25, 2012 6:31PM
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Problem is they`re outdated on movies and TV series!!!!  If they kept up to date with the rest of the systems, they should be all right!!!
Jul 25, 2012 4:14PM
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Well .. they still having 30 million people sending them money every month .. cant be that bad. I'm one of them.
Jul 25, 2012 7:31PM
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They deserve what they got!  When you blatantly get greedy and raise prices on people  what do  you expect.  Let this be a warning to corporate america and Cable companies. People have a freedom of choice and they will exercise it when pressed financially.  American Corporations are the worst scum in the world with their excessive CEO Pay unlike anywhere else in the world unbridled power, offshore accounts, and shipping jobs overseas!  They are crazy insane greedy and deserve to go down in flames!

 

Buck em!  Go to hell you unbelievable Scum.  You show no integrity to your employees, Your customers

and no loyalty to  your fellow countryment you can go to hell!!!

 

 

Jul 25, 2012 5:48PM
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I have the streaming service, and the selection is kind of limited.  I would think they would be working overtime to rip every available DVD to a data file for streaming.  That would make for an impressive selection, and they can work out some type of per view royalty to the studios.

How could you POSSIBLY give me a thumbs down?  I guess these guys are the 2 people in the world that thinks crappy selection is a plus???
Jul 25, 2012 7:59PM
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maybe if they put more content and all of a series up instead of only a few episodes they may get more people. also fix the streaming 

Jul 25, 2012 5:32PM
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if you ask me the dvd selection is a who lot better. i like it.
Jul 25, 2012 4:36PM
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just dumped directv...got netflx for $8 a month ... deal of the century
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