Top video rental company reported better-than-expected 49 percent surge in third-quarter earnings by $ 822 million, exceeding the target of Wall Street, approximately $ 812 million. He also beat expectations for earnings per share.
But investors - remember how the company is headed by CEO Reed Hastings had been driven in recent months, customers and damaged its credibility with rising prices and other high-profile stumbles - they are based on fourth-quarter warning.
Netflix shares fell 27 percent to $ 86.70 after the close of trading, about 70 percent below the level of just under $ 300 per share in July.
"The reason for the action is getting crushed trends simply continue to deteriorate," Jenny Montgomery Scott analyst Tony Wible said.
Netflix announced that it has lost more than 800 thousand subscribers in the third quarter of the U.S., more than 600 000 on it forecast in September. Total number of subscribers stood at U.S. 23.8 million.
Looking ahead, the company said, DVD subscriptions will be "drastically reduced in this quarter," but the total number of subscribers of the United States, which includes customers who pay for their online streaming service, will be "slightly up".
Netflix wrote big checks to expand its streaming content so that it can attract new customers and return to the red-hot growth, was once famous. In 2012, maintenance costs would be "nearly double" this year, the company said.
Netflix also forecast losses for the first quarter of 2012 as it expands into Europe.
"We expect that the cost of our entry into the UK and Ireland will work to ensure we were operating at a loss on a global scale, that is, domestic profits will not be large enough to cover both international investment and pay for the global and G & Technology and Development" Hastings said in a letter to shareholders accompanying its quarterly report.
Hastings added that the subscriber defections due to price high-rise should slow in coming quarters, "as price effect washes through." The company said it would return to profitability by increasing its global streaming subscriber base more rapidly than their costs rise. He also plans to increase its margin by 1 percentage streaming every quarter.
The company reported earnings per share of $ 1.16 on net income of $ 62 million. Analysts had expected earnings per share of 94 cents, according to Thomson Reuters I / B / E / S.
However, these assurances did not satisfy investors, the company gets back on track.
"Customer numbers were disappointing. It seems that they see a very weak subscriber numbers in the fourth quarter," said Lazard Capital Markets analyst Barton Crockett.
For the fourth quarter, Netflix forecast earnings per share of between 36 cents to 70 cents and revenue of $ 841 million to $ 875 million.
"Management is much lower than what people expected. I think they're hitting the reset button here ... to set the bar for ourselves to go forward, that they can achieve," an analyst with Piper Jaffray, Michael Olson said.
The company, which shook Hollywood to its DVD by mail service, tries to recover from the roughest patch in its nearly 15-year history as it moves to highlight the online streaming television and movies.
Shares fell in July, when Hastings announced price increases for customers who want a DVD-ROMs and video streaming. The wave of cancellations hit the company, which was famous for the hot growth and loyal customer base.
Hastings apologized for not explaining his decision and admitted to the "arrogance", but instead of calming concerns, he went to a new wave of complaints service plan to put a DVD on a separate website called Qwikster. He quickly dropped the idea of broadly prepared.
How Netflix stumbles, rivals such as Blockbuster Dish Network Corp, Amazon.com Inc and a Wal-Mart Stores Inc. Vudu are stepping up their online offers entertainment to better compete with Netflix.
In a letter to shareholders, Netflix said it was "moving forward as quickly as we can restore our reputation and return to growth."
No comments:
Post a Comment