Netflix revenue and subscriber base rise but Wall Street isn't happy

By on July 23, 2013, 11:15 AM
netflix, revenue, streaming, earnings, wall street, quarterly earnings, subscribers, dvd by mail

Despite reporting soaring revenue and moderate subscriber gains for the second quarter, Netflix was unable to meet Wall Street’s expectations in both categories. For the quarter ending June 31, the streaming media service accounted for revenue of $1.069 billion which fell short of expectations of $1.072 billion. Quarterly income shot up to $29 million from just $6 million, however.

Netflix gained 630,000 subscribers during the three month period which was just above the company’s target but again, short of what analysts were hoping for with at least one analyst calling it “utterly disappointing.” Others, however, like Pacific Crest analyst Andy Hargeaves, noted it was a very good quarter by most standards, but that doesn’t cut it when your stock has risen by 200 percent.

Netflix was banking on the return of the comedy series Arrested Development to reel in additional subscribers but it would seem that didn’t exactly pan out as anticipated. CEO Reed Hastings said in a letter to shareholders that Arrested Development was responsible for providing a small but noticeable bump in subscribers.

The company’s DVD-by-mail rental service wasn’t as fortunate, continuing its quarterly slide. Netflix lost an additional 450,000 DVD subscribers during the three month period which leaves them still with 7.5 million customers. Most expect the DVD business to continue to dwindle as the medium continues the journey toward obsolescence while at the same time, Netflix puts greater emphasis on the streaming business.




User Comments: 9

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SirGCal SirGCal said:

See, I did Hulu and Netflix both. Dropped both cause they simply had nothing to watch (and I couldn't stand Hulu's adds for paying users)...

As for media, that is what I prefer. I want to rent the actual disks. I want to see the bonus features, see the full Blu-Ray movie, not some stripped down for streaming feature, etc. So I dropped everything and just went back to buying them on sale for < $4 each. So I have to wait a bit longer to see them. Whoopee.

2 people like this | harrypujols harrypujols said:

Netflix is a buy. Investors should be happy their DVD subscriptions are dropping, as is a dying format and not as profitable. Streaming on the other hand, will only become more profitable as time goes on. Netflix strategy is starting to pay off too. When they started, they were the 21st Century alternative to Blockbuster. Blockbuster was slow to adapt, and we all know where it is now. Now, their eyes are on premium cable, becoming an alternative to HBO. HBO is slow to adapt, and we can see where this story is going.

MilwaukeeMike said:

There's a front page story on Yahoo Finance about Netflix today and whether their original shows are worth it for them. Netflix thinks it's too early to tell because they know people like to watch a few seasons of a show at once and House of Cards and Orange is the New Black only have 1 season. If things go well for them, they could be the next HBO.

Some investors also want Netflix to bring in extra money by raising their $7.99 price, but CEO Reed Hastings said that he's not going to change the price after getting burned the last time they changed their pricing.

tipstir tipstir, TS Ambassador, said:

Netflix service is excellent and they have movies I had lost to the EX. I like the service for streaming. I don't have CATV anymore I will not pay into that racket. So now I have 71 HDTV over the dual HD-ANT outside with Amp + Drop Amp into 8 devices. Record using MCE 7 in HD 5.1 Digital Plus. No issues there.

Hulu Plus another racket you have to watch commercials and restricted too. Comcast runs that service. Dropped this one also.

Amazon Prime Instant Videos Free when you pay $80 a year for 2-day Prime Delivery Service. Choices are okay HD out of the box, you can watch stuff on your PC without the streaming cost. But you can't add any movies to a queue, only if you pay for the movie it stay's in your library. Netflix you have a queue.

Vudu gives you $5.99 to watch one of their HDX (Blue-Ray 1080p True HD 5/7.1 Dolby Digital) These movies like HDX can run you up to $16.99 that's a lot to spend on one movie. Quality is good, you get a Cloud drive to watch moves in HDX.

Crackle TV free but you have a lot of commercials to go through these odd ball movies they have you to watch. But with their service you can watch movies on endless loop so one movie finishes the next one starts. Good if you had a party and you needed background noise.

There are view more of them popping up and I use my SONY SMP-N100/N200 to view these or Windows 7 PC or Android Tablet or Smart Phone. Lots of choices today.

Guest said:

There's a front page story on Yahoo Finance about Netflix today

Who in their right mind would trust anything they read from Yahoo! news? Better yet, who would actually want to read that garbage.

Chazz said:

They make profits but still lose money. ...Guess that's not good enough.

MilwaukeeMike said:

They make profits but still lose money. ...Guess that's not good enough.

Sounds like they won, but lost. I bet their investors are sad unless they're happy.

1 person liked this | Chazz said:

Sounds like they won, but lost. I bet their investors are sad unless they're happy.

I think these investors are sad even while they're happy.

Vrmithrax Vrmithrax, TechSpot Paladin, said:

And this is why I think Wall Street is a complete crock, sometimes... Do the math, and Netflix met 99.7% of their expectation, in a time when competitive products were being introduced and pushed harder, and some of the ***** "analyst" speculators find the performance "utterly disappointing?" Really? It's funny how many stocks are listed as "under-performers" in a market that is hitting record levels, isn't it? Maybe the "analysts" need to analyze their analyzational skills in a more analytical manner...

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