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.