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Netflix Misses On Revenue, Beats EPS, Free Subscriber Number Surges, $96 Million Cash Generated From NWC Change
Highlights from Netflix' earnings release:
- Subscribers – 20.01 million
- Net Subscriber Additions – 3.08 million
- Revenue – $596 million, miss estimte by $1 MM
- Operating Income – $78 million
- Net Income – $47 million
- EPS – $0.87 per diluted share, consensus of $0.77
- Total subscribers: 20.01MM from 16.933MM Q/Q
- Paid subscribers increased by 2.4MM, from 15.863MM to 18.268MM
- Cancellations per month increase to 857K from 723K Q/Q
- Bust most importantly, free subscribers surged from 1.070MM to 1.742MM. These are people who are not paying.
Table from the earnings release:
We are going through the earnings release right now but we would caution investors to be very careful with the free cash flow number: it appears the bulk of it comes from net working capital extraction.
Update: as expected, Net Working Capital provided roughly $100 million in "cash." If cash contributed from NWC had come in line with Q3, the company's Non-GAAP FCF would have been ($45) million, a drop of $50 million from Q3.
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Earnings? They still do that? Shiiiiiit
more nonpaying subscribers? Doesn't that mean trial period? I would presume this is a good thing since the more people they have in trial, the more people who will convert into paying subscribers, no?
not unless they cancel before their trial runs up, which means they are just using the free month, and then not going to subscribe.
wash, rinse, repeat. I would do this with all of the free things I could. Sign up for a while, cancel when the free trial runs out, sign up for a different name or have someone else do it that lives with me.
Comcast finally stopped offering my address discounted rates for cable internet.
It's not necessary to trick Comcast using different names. Just call them up and use the voice menu choices to cancel your service. They will connect you to a sales person to try to change your mind. Tell them that your bill is too high and they will put you on a 6-12 month discount promotion. I do this over and over every time the promotion expires.
What has got NETFLIX smokn is a gadget called a ROKU.( others out there do the same and more, but this one is simple as hell,and works).
For $8.00 a month, (Netflix Charge), and a $60/80/$100 player depending on your Video needs, your in business.
Streams directly into your home, WiFi is built into the ROKU, and if you have a computer ON, or off(if DSL), you can watch tons of flicks for almost nothing.
Plus, they basically have no competition.
The only problem I have is this: I currently pay $19.95 for my DSL (768K) which I'm happy with and does what I need. In order to use Netflix or any streaming service I would have to pay about $50 for a bandwidth good enough to stream HD or even regular video. That $7/mo service just became alot more expensive.
How much HD/bluray programming do they have?
Does anyone remember in the year before AOL exploded all over the living room carpet that their "free" subscribers also surged?
The oldest accounting tricks are usually the best accounting tricks.
And they told us they were "fully funded". Whatever that meant.
BTW they missed on revenue because my monthly subscription credit card charge was denied by my TBTF bank. Sorry about that Netflix. My bad.
Well, it seems good enough for a 6 1/2% pop in the after-market
Good earnings all around AH. Not only NFLX hitting it out of the park but QCOM crushed as well and SBUX beat with strong report. Should help push SPX over 1300 tomorrow...finally!
no doubt you'll be completely thrilled when the USD hits 50, gas hits $10 per gallon and you get pistol whipped every time you go to an ATM.
Good times are comin for ya Harry. good times indeed.
Well, that'll be for everyone, not just Harry. At least he'll have his Apple money.
Apple money: Harry's island economy barter/trade?
Harry Wanger the new Warren Buffet
HW=WB
When Harry is eventually forced to pull his head out his ass, make sure you have earplugs in. The "POP" will be deafening!
I always wondered why he acts so stuffed up.
You need not trouble Harry with simplicities, he is off to win the future!
hmmm...I guess you didn't read the whole thing
<<Depsite reporting healthy results, Starbucks lost nearly 3% in after-hours trade, reflecting shareholders's disappointment over the weak outlook>>
I seem to be sensing a pattern ... Harry tends to post on days the indices and/or certain stocks are going up, not the reverse. Would love to see a chart correlating these variables in order to determine if there is a significant correlation or if my bias is at play.
Are you fucking retarded? NFLX was out of the park?!? Seriously, you're a moron if you think missing on top line and beating bottom line is good. I'm sure when in Q3 they miss huge on top and beat on bottom (from none other than tax vacations) you'll be recommending it to all your fellow neighbors.
SBUX and NFLX are not part of the sp500. QCOM is, but this one company will not carry the sp500.
My CC finally went through so they reported it as better future projected earning. I'm a heavy hitter user on Netflix. My account moves markets. :>)
++ "What's in your wallet?"
Black Amex?
"What's in your wallet?"
Dead moths, nothing for 'em to eat.
At least they have no competition. It's not like any other company could stream content or mail out DVDs. The bar for entry on this one is set impossibly high. Oh, wait. Strike that. You just know that the only people buying this shit are the people shoving this into 401k accounts and pension funds.
Well, they do have competition from Blockbuster (crap competition, but competition nonetheless). The quality of Netflix service has been steadily eroding for 2 years or so. Their discs are scratched and barely useable. You can't read the labels on the sleeve.
But what sealed it for me was this, from the Huffington Post of all places.
http://www.huffingtonpost.com/2010/09/23/netflix-ceo-hopes-selfabs_n_736...
This is one self-absorbed American who promptly quit Netflix over the arrogance of Hastings
I totally agree with you that other players can and will enter this market, which, for me, makes their valuation ridiculous. On the other hand, kudos to Netflix for being smart to realize that trudging to the local video store at 11:00 on a Thursday night sucked (especially in the snowy North). And smarter still to realize that streaming content will/has replaced delivery by post.
But, as I said, there will be competitors and big ones. Case in point - Groupon recently turned down Google's acquisition offer (I would've taken the money and run) so now Google is developing a similar type of service:
http://mashable.com/2011/01/20/google-offers/
Edit: Not that I'm saying that Google will be the one that unseats Netflix and/or Groupon (any one remember Orkut?) but I think the market space will get more crowded shortly and for whatever reason being first does not equal longevity.
Don't forget Red Box, their eating BB's ass like crazy.
Only way BB is still hanging is they get the NEW RELEASES 28 days before FLIX.
Don't forget Red Box, their eating BB's ass like crazy.
Only way BB is still hanging is they get the NEW RELEASES 28 days before FLIX.
You just know that the only people buying this shit are the people shoving this into 401k accounts and pension funds.
No, 401k funds are designed to not allow you to choose MONEY making stocks,or commodities, etc,etc, you get bottom feeding.
Never been in one yet worth a shit.
I don't have time to think about that Mr. Dissonance. I have to get ready for the pets.com earnings call. I think it comes on in 15 minutes.
Exodus.com's stock split FIVE times in just a little over 12 months.
Their CEO says the company doesn't need to turn a profit.
Exodus still holds a NASDAQ record for 13 consecutive quarters of >40% growth.
I don't have time to think about that Mr. Dissonance. I have to get ready for the pets.com earnings call. I think it comes on in 15 minutes.
+1
I lulzed.
I remember they sent out millions of free start-up discs to people in the post and then capitalized the cost, regardless of whether people used it or chucked it away.
and those recrurring charges on your credit card that you provided in good faith for the free service that you cancelled (after hours in 1-800-AOLvoice mail hell) before the deadline so as not to incurr any charges
I owned AOL back in the day ( 1999 ). I Walked out the door for work with stock price at 120. When i came home, It was 160. It was better than sex. Back then, Earnings didnt matter. Nothings changed
Yeah, I used to daytrade AOL back then as well. I even daytraded Enron as a penny stock after they went bust. Made a couple hundred bucks out of it.
AOL was my pride and disgrace. It was both the best entry and the worst exit I ever made.
My mom lost $20,000 day trading the dot.com's fresh off retirement..
She lost everything on Yahoo & AOL ...
Good thing you can learn lessons and protect people from gold and silver. LOL
You're such a saint.
Opps typo. I meant taint.
This company made a whopping $47 million this quarter, in a totally propped up consumer economy, and they still have a market cap of $9.5 billion? That is extraordinary.
We have a virtual economy. It is virtually impossible to believe any of this. Too bad we can't eat virtual food and drive virtual cars.
share price up over 6%, which must have taken out most of the shorts.
If they can strike a deal so they can get paid in food stamps, the sky's the limit on this one.
triple digit PE = the new normal.
Scotch. Double. Neat. thank you.
the new new thing,
V I R T U A L s e x †
I wonder if $47mm/Q is worth sacrificing all that national Internet bandwidth for.
Those....were....the....days my friend. We thought they'd never end. We'd sing and dance forever and a day. We'd live the life we choose. We'd fight and never lose. Those were the days.
http://www.youtube.com/watch?v=AyaTIXdN5fI
I edited that out when I saw you made a similar point above. Yeah, at one point you couldn't make it through the day without getting three or four AOL CDs pushed on you...
Never knew that song was her...
When AOL first started with the free trials, they didn't even require a CC. A friend used that to get a year of free service 30 days at a time. He would just let everyone know what his new ID was when each trail ran out. Just pop in a new CD with a new code.
Then AOL switched to needing a CC. But that was quickly changed after people were getting charged before the 30 day trial was up. So AOL took the CC info but never verified it. My friend then put in fake CC info and got another year of free service.
He justified it in his mind by telling me he was contributing to the great AOL numbers, thus making the AOL stock owners feel good about their stock. :>)
I formatted and stockpiled the free floppies I got in the mail every day. That felt really cool. Who knew what a rewritable "CD" was then.
Ladies and gentlemen.......Old School over here. :>)
I'm laughing after reading this...I did the very same.
Hell, I am still using some of them for redundant backup, with a portable A-drive.
What the fuck is a floppy? Is that like a "pay phone" or "carbeurator" I heard my dad talking about?
I know what a CD is. Its those big black disc things made of wax that silly old people used for their gay music like stone temple pilots and miley cyrus's dad.
not so much a pay phone as one of those things that superman used to get in to change his clothes.....lemme see...oh yeh, a telephone booth.
We're a NFLX economy, now.
And solars.
Solars & NFLX FTMFW.
No kidding, people dont realize that their service is being cut or charged for extra downloading.
Netflix is the reason AT&T went to limited usage from unlimited on the iPad.
we just sign up for a free account and cancel within 30 days and then sign up for a free account under a new name.....i guess we will eventualy run out of people but then will stop being "members" of netflix
Use your phone book to come up with bogus names. I'm sure you have centuries worth of names to use.
Hugh Jass
Fake it 'till you make it, and if you don't make it, take the money and run?
Go on, take the money and run.
Net income 47m revenue 596 +- one m.
P/E unknown. cancelations up over the quarterly report. Sector influence Hi. I'll run the numbers and find a book value.
Revenue per subscriber fell from $36 per sub to $29.78 year over year. That and not accounting for distribution costs to added subscribers must be why the CFO bailed
It's a losing model from here on out. No doubt they need to increase prices but can't.
Im surprised they arent using the apple/facebook technique of claiming more users than human population would allow
And after hours NFLX is up 12 points while the shorts, headed by Whitney Tilson, are scrambling for cover
i m short, and i am not scrambling. if you and your confident ilk actually could read a set of financial statements you would understand why.
right. great opportunity to add to short positions
i m short, and i am not scrambling. if you and your confident ilk actually could read a set of financial statements you would understand why.
$180 to $195 in 8 min....
Up 6% after hours. Shiiiit, I'm glad I closed my trading account otherwise I would have shorted this on margin.
Held short all day in anticipation of a FFIV type collapse after earnings. Luckily was able to trade out after hours and closed short from some numb nuts at $179 before the smoke cleared and it started the rise up. Fucking crazy.
Wait for Asia to open and check your calendar. Tokyo fixing and all.
Where do I sign up for one of these "free" accounts. I downgraded to internet only account.
What's wrong with you guys?
We have what, 20% real unemployment? 43,000,000 on food stamps? Record numbers not paying their mortgage?
Every night is MOVIE NIGHT biotches!
I think the Bernank, Lloyd, Dimoon are actually paying for millions of subscriptions to keep the unwashed masses placated.
I subscribe to blockbuster mail svc. plus i can trade them in at my local branch until it closes down while they mail me 3 more movies. There isn't enough HD streaming/download content yet for me on Netflix. need HD for my projector and 10ft screen.
Common Cents. I so agree with you! But I work 16 hours a day as a self employed trader. My friends and family are really intrigued with my work. I try to keep it transparent and teach. I have bolckbuster card, and never have the time to finish a movie. Let alone 3!
180$ stock earning 80 some cents a share....thats perfectly normal.
Earnings? We're gonna party like it's 1999. We don't need earnings. It's all about subscriber growth, remember, that's what AOL said.
Netflix has got another year or two to get the stock to low earth orbit, then buyout a real world company, mmm, say, Disney. There's synergy there, right? Then down they go as another business case study.
The Winners of the New WorldBy Jim Cramer 02/29/00 - 09:42 AM EST
Editor's Note: James J. Cramer is the keynote speaker at the 6th Annual Internet and Electronic Commerce Conference and Exposition, held today at the Jacob Javits Center in New York City. We're running the full text of that speech here.
"You want winners? You want me to put my Cramer Berkowitz hedge fund hat on and just discuss what my fund is buying today to try to make money tomorrow and the next day and the next? You want my top 10 stocks for who is going to make it in the New World? You know what? I am going to give them to you. Right here. Right now.
OK. Here goes. Write them down -- no handouts here!: 724 Solutions (SVNX), Ariba(ARBA), Digital Island (ISLD), Exodus (EXDS), InfoSpace.com (INSP), Inktomi (INKT), Mercury Interactive (MERQ), Sonera (SNRA), VeriSign (VRSN) and Veritas Software(VRTS).
We are buying some of every one of these this morning as I give this speech. We buy them every day, particularly if they are down, which, no surprise given what they do, is very rare. And we will keep doing so until this period is over -- and it is very far from ending. Heck, people are just learning these stories on Wall Street, and the more they come to learn, the more they love and own! Most of these companies don't even have earnings per share, so we won't have to be constrained by that methodology for quarters to come."
Nic Lenoir smoked again....
It's "Risk On" again, baby!!
Check out GDX, by far the riskiest, most crack-addled ETF on the planet. Four days of shorts wiped out in one fell swoop.
No, that would be NUGT
Adding this one to my retirement portfolio.
hey catfish mouth robo uber bull winkle wanna be: have you heard back from gentleman jim? he's back from inspecting his gold mine. why not give him a call and razz him because of gold's 5% drop from your flea-bitten los angeles apartment.
Microsoft had to give away tons of copies of windows 7 for 30 bucks to get any kind of numbers.
At 250.00 Im shorting this inevitable penny stock with extreme prejudice.
Betya HFT can keep it on the dollar menu.
"The market can remain irrational far longer than you can stay solvent."
That is why I have built in 60 dollars in irrational retardation and short covering but never has this statement been more true than in the past 2 years.
10 Billion market cap for a company that is years away from a peak that earns 200 million a year in Net..wake me up since I must be dreaming.
Hey they don't need you reggie'ing up their irrational expectations.
Sweet update. 100 million in Net Working Capital counted as "cash," for NFLX.
This is one quality company, and I see that its stratospheric, nosebleed P/E ratio is richly rewarded based on the the fact that it's adding so many non-paying customers so quickly.
I love Enron-esque earnings conference calls.
I haven't been into a bricks n mortar video store in ages. I kind of miss making the trip down to the old video store. They had free popcorn. You'd peruse the new releases and argue with the significant other about what to rent.
Ain't hyperinflation a bitch?
Who gives a crap about NFLX. Just in case nobody have noticed, tech companies reporting the past 2 weeks all met estimates but guided lower. SBX just reported they are getting hit with high coffee prices and guided lower. This sugar high is aboiut to wear off and when the SHTF,and it will, retail holders of this crap are about to get cornholed.
Risk off trade and deflation scare coming soon to a theatre near you.
Time to load up on hitler dingleberries and long dated treasuries, both due for a bounce and both just as hated right now.
Coming SOON
soon [su?n] adv 1. in or after a short time; in a little while; before long the doctor will soon be here as soon as at the very moment that she burst into tears as soon as she saw him as soon…as used to indicate that the second alternative mentioned is not preferable to the first I'd just as soon go by train as drive [Old English s?na; related to Old High German s?no, Gothic suns]
Too long. Rally on
I'm waiting....But if the macro event that would unwind it involves the "risk free" asset?
Melt up bitchez?
But...The FOMC today said inflation is still "too low"...
...
01-26 14:19: FOMC says although commodity prices have risen, longer term inflation expectations stable, underlying inflation trending down
I feel kinda guilty but everything and more is available as a bit torrent. I finally found the x rated version of pirates II. Try buying that legally. All u can find is the r version. Streaming videos are gonna have to be awfully cheap and convenient to compete with free.
Sure, except that what you are suggesting is illegal.
GE in the high 19's Any thoughts Tyler. Thank you.
With IMMELT on his knees now in front of the Pubah, bet on it.
I think the Q&A will be much more important. They're refusing to provide guidance. But people will ask.
HA Q&A.
The refuse to hold a call and answer questions.
If one choses one may send the company an email.
qqq ?
Guidance is not the topic. It's fun trader talk. Zero Hedge posts very up to date charts.
AOL was a joke compared to netflix as far as free subs go... As long as the paying subs outpace the freebies, then it's working.
why Amazon hasn't bought netflix by now doesn't make sense... no one is streaming amazon VOD to their big tvs...
At some point, a lot of money is going to be made and lost on NFLX' drop and it's going to be quick and steep. It's not a matter of if, but when. Option premiums were inflated ahead of earnings but they should contract now. Taking a position in put options and rolling them forward is a smart strategy as it will eventually pay off in a big way.
NFLX Cute!
Thanks again Art Roonie Jr. (sp) sorry laughing
SO why is it up 7% ?
Any info for a rookie like me.
more buyers than sellers.
+1
you mean more HFT computers than sellers.
Finally, someone's making some cents.
That time of the month..eh!
Fade this farkin' pig.
Just broke $200 a share...
I didn't catch the name change they mentioned. Was it Enflix or Netron?
Enron jokes. I'm long those all 2011.
Do they count suspended accounts as current subscribers?
is that EPS correct? 87 cents???? ...and its shares are $182?????????
LOOK AT THE PER-SUBSCRIBER CASH FLOWS, THEY ARE COLLAPSING. CONTENT SPEND EXPLODING. ALSO, STREAMING WAS SUPPOSED TO "DRAMATICALLY IMPROVE CHURN", YET CHURN PER PAYING SUBSCRIBER IS STARTING TO TREND UP.
WHY WOULD THE COMPANY WANT TO STOP DISCLOSING CHURN IN 2012, WHEN DECLINING CHURN THAT SHOULD BE COMING FROM STREAMING WOULD REALLY BE KICKING IN THEN?
UNLEVERED FCF PER SUBSCRIBER, BEFORE MARKETING COSTS, TURNED DECIDEDLY NEGATIVE THIS QUARTER!
FOUR PERCENT MONTHLY CHURN JUST DON'T HUNT.
Count me as one of the free subscribers who will cancel when the trial ends.
They're offering Netflix streaming in Canada now, but the internet providers are also in the business of providing content, and they just got the go ahead to go to metered billing. I don't see them making it too far here.
We're getting charged a lot for crappy up/download speeds. There needs to be some investment in networks, then maybe it might be worth the money they want to charge.