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From NetFlix: "The Biggest Issue Holding Back Much Stronger Growth Is Payments"

Tyler Durden's picture





 

Everyone's favorite Whitney Tilson repeat-endorsed, slow motion trainwreck, NetFlix, has reported results after hours. They are, as expected,  terrible with lots of cash burn, declining margins and excuses, and as a result the short squeeze is over and the stock is imploding after hours. Among the details:

  • Q3 Gross profit declined to 26.8% from 27.6% in Q2 and 34.7% in Q3 2011.
  • Total cash declined by $32 million
  • Free cash flow was -$20 million, despite positive "net income"
  • "Significant uses of cash in the quarter (relative to net income) were cash payments for content (in excess of the P&L expense), cash payments for PP&E (including cache boxes for our Open Connect program), and reductions in miscellaneous accounts payable and accrued expenses."
  • Q3 Streaming content obligations were flat at a whopping $5 billion. $2.1 billion is due in the next year. The brilliance strikes here first. These obligations "not include obligations that we cannot quantify but could be significant." Uh... What?

And while the firm forecasts a net income loss in Q4 of ($13)MM to $2MM as seen in the table below, which means a far worse free cash flow loss in Q4, the absolute pearl was the following:

"The biggest issue holding back much stronger growth is payments."

Priceless.

Full NFLX outlook:

 

And the firm's letter to what investors are left (pdf).

 

 


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Tue, 10/23/2012 - 16:48 | Link to Comment no taste
no taste's picture

It seems we are at a point where people are choosing to buy food instead of rent videos.

http://howstupidare.blogspot.com/2012/10/how-stupid-are-tv-networks.html

Tue, 10/23/2012 - 16:55 | Link to Comment vast-dom
vast-dom's picture

"The cause of our insolvency is due to our insolvency." 

Tue, 10/23/2012 - 17:00 | Link to Comment ParkAveFlasher
ParkAveFlasher's picture

"Dudes, you totally have to pay us back!  We have, like, investors.  I'm totally not harshing you!  Yes you can keep DSOTM another week."

Tue, 10/23/2012 - 17:05 | Link to Comment walküre
walküre's picture

How much of NFLX cash has gone straight to Lalaland? This is not good news for Hollywood.

Tue, 10/23/2012 - 17:09 | Link to Comment pods
pods's picture

I almost shit when I read 5 BILLION for content they stream!

Imagine if they actually streamed anything worth watching?

(current or former NFLX customers know what I am talking about)

pods

Tue, 10/23/2012 - 17:19 | Link to Comment ghengis86
ghengis86's picture

The biggest issue holding back Corzine's prosecution is payments.

-AG Holder, Barry, et al

Tue, 10/23/2012 - 18:25 | Link to Comment MillionDollarBogus_
MillionDollarBogus_'s picture

I read books for entertainment.

What is a Netflix...???

Tue, 10/23/2012 - 18:56 | Link to Comment malikai
malikai's picture

I read books for knowledge.

ZH is for entertainment.

Tue, 10/23/2012 - 19:38 | Link to Comment knukles
knukles's picture

I read ZH for knowledge

I play with my dinky for entertainment.

Tue, 10/23/2012 - 17:26 | Link to Comment Tijuana Donkey Show
Tijuana Donkey Show's picture

This is why Hollywood needs to die. 5 Bil for bullshit? It's almost as bad as the NFL or NBA. 

Tue, 10/23/2012 - 17:46 | Link to Comment walküre
walküre's picture

The NHL is dead and it's over money. They don't say it straight up but the reality is that nobody wants to pay billions for these hockey stick wielding clowns. The revenues are just not there.

How long can they afford billions to glorified ball players?

Tue, 10/23/2012 - 19:51 | Link to Comment mick68
mick68's picture

I'm seriously considering ditching Netflix. Content blows hard and now I see they need to tighten up profits, so it's only getting worse. Wife still wants it or it'd be gone by now.

Tue, 10/23/2012 - 22:53 | Link to Comment Albertarocks
Albertarocks's picture

Don't worry about it bro.  Everybody shits once in a while.  It's normal.

Tue, 10/23/2012 - 17:02 | Link to Comment FL_Conservative
FL_Conservative's picture

You mean....like.....cash flow is....like.....important????

Tue, 10/23/2012 - 17:10 | Link to Comment Matt
Matt's picture

They would be doing great if they spun off / wound down the international streaming segment, which seems to be a massive loser. I understand their growth plan is all about getting big in as many markets as they can. However, it doesn't seem like international growth is working. You gotta know when to hold'em, you gotta know when to fold'em ...

 

EDIT: well, not great, since the more profitable DVD side is shrnking faster than the streaming side is growing, but at least cash flow positive. Scrap international and expand domestic streaming content.

Tue, 10/23/2012 - 17:08 | Link to Comment CPL
CPL's picture

I recall similar excuses during dot.bomb.

 

"We have a great idea...now if it was actually worth something to someone other than speculative shareholders."

Tue, 10/23/2012 - 19:08 | Link to Comment CPL
CPL's picture

Name a kid under 6 in the last 40 years without a Seaseme Street doll.

 

There's your answer.  Cheap puppets, some kid with release forms, bam...you got a show.

Tue, 10/23/2012 - 17:02 | Link to Comment camaro68ss
camaro68ss's picture

My familys 240 million dollar company showed net gains year over year and we had the same problems to, payments. if you have 40 million in receivables and have not been paid in 120 days. You might as well wright it off because now a days, if you don’t get paid in 60 days, you’re not getting paid.

you dont have profits if you cant collect the cash. we went under for it.......

off to my new job, welcome to <fill in the blank> can i take your order.

Tue, 10/23/2012 - 17:43 | Link to Comment max2205
max2205's picture

Switched to Apple TV last year

Tue, 10/23/2012 - 17:46 | Link to Comment max2205
max2205's picture

As long as they still pay the USPS all those jobs are safe

Tue, 10/23/2012 - 17:24 | Link to Comment Larry Dallas
Larry Dallas's picture

Its all about the wages and wage growth.

Superfluous expenditures will decimate most discretionary businesses.

Tue, 10/23/2012 - 18:31 | Link to Comment NotApplicable
NotApplicable's picture

Wage growth?

Umm... that was last century.

Tue, 10/23/2012 - 18:13 | Link to Comment Stoploss
Stoploss's picture

Where is the token flacid penis chart that usually goes with the after hours unfluffing of the stock?

Tue, 10/23/2012 - 19:51 | Link to Comment stocktivity
stocktivity's picture

Ha Ha ,,,dopes. That is priceless Tyler....other than payments, we would be doing better....hee hee ...dopes. It's all bullshit but sometimes the bullshit is funny.

Tue, 10/23/2012 - 16:50 | Link to Comment pragmatic hobo
pragmatic hobo's picture

on the brighter note, Hastings might finally turn profit on his FB holdings.

Tue, 10/23/2012 - 17:02 | Link to Comment LongSoupLine
LongSoupLine's picture

Update:  Whoops...or maybe not.  Facebook just anounced Red Bull sponsorship.

bye bye FB, you piece of shit reason for the dumbing down of the world.

Tue, 10/23/2012 - 17:10 | Link to Comment CPL
CPL's picture

I bet everyone gets to be friends with Red Bull now.  Or at least heavily influenced.

Tue, 10/23/2012 - 17:13 | Link to Comment The Gooch
The Gooch's picture

Especially the "influenced" Ferrari-driving grand-kid heir. - http://www.guardian.co.uk/world/2012/sep/06/thai-police-red-bull-heir-dr...

Tue, 10/23/2012 - 17:33 | Link to Comment chet
chet's picture

I wonder if they'll keep dumbing down until they get My Space's reputation, then some new network will come along and claim to be the new high-brow yuppie network, until they in turn allow everyone and their uncle in....  Many a good nightspot has been lost in this fashion.

Tue, 10/23/2012 - 22:06 | Link to Comment ForTheWorld
ForTheWorld's picture

It's called Diaspora. It's already been through the cool, unknown entity factory, now people are flooding in, and since registrations were opened to the public, the signal to noise ratio has dropped dramatically.

Tue, 10/23/2012 - 16:51 | Link to Comment catacl1sm
catacl1sm's picture

I'm almost at the point of shutting of cable too. Hulu is ony $8.

Tue, 10/23/2012 - 17:02 | Link to Comment Vincent Vega
Vincent Vega's picture

I turned off cable about 3 yrs ago. I gave my flat screen to my parent's. Honestly, the first few days/weeks were difficult but now I don't miss it. In fact, if I'm at a friends house or a bar/restaurant I literally turn my head. I can't believe I ever watched it. I do own some movies on DVD and will sometimes watch those on my PC. I've picked up a few new hobbies to occupy time that was once spent sitting on the sofa. Glad it's gone!

Tue, 10/23/2012 - 17:30 | Link to Comment blunderdog
blunderdog's picture

It's been over a decade for me, and I've developed that same almost *allergic* response to the teevee. 

News shows and commercials are by far the worst offenders.  I can tolerate a few hours of the stuff in desperate circumstances, but whenever it happens I'm reminded of just how terrible that crap is.

"Shut the cousins up."  --Guy Montag

Wed, 10/24/2012 - 04:19 | Link to Comment MisterMousePotato
MisterMousePotato's picture

I have not had a television since 1984. (Coincidence?)

Don't miss it at all, although I did a bit at first.

But now ... want to watch weather radar (who doesn't?), well, that can be found on the net. Only better.

I used to like to take the television upstairs to the bathroom and set it on the toilet seat, where I would watch Monday night football, drink gin, and take a long bath. That ... I missed. Hm. Maybe I still do a bit.

Missed the debates. Oh? You can watch them online? But why would you want to? Actually, this (http://www.youtube.com/watch?v=WpMPu5p_QXU) is kinda worthwhile watching.

Y'all talk about MSCBN (?) babes. Well, I Google their names, and then >images.

I think I'm fairly well informed.

I know who Snooki is. (Although I don't think I know what she looks like.)

I know who Christine Legarde is, and I do know what she looks like.

So .. meh.

Tue, 10/23/2012 - 19:00 | Link to Comment JuliaS
JuliaS's picture

10 years with no TV or a phone landline. 2 months without a cell phone. E-mail, instant messaging and Skype instead. Communication on my terms.

Giving up the cell phone was the most liberating decision in recent memory. Aside from having one less bill to pay, the ability to disappear and not be bothered is indescribable. I know phones can be turned off, but how many actually do that voluntarily? I used to shut mine off only at hospitals and other places where posted signs demanded it. Otherwise having no phone was like missing a body part.

I've gotten a good kick out of people asking me for my number and telling them I had none. Wish I could do the same thing with my bank account, but unfortunately I get paid by check and bills/utilities are auto-deducted.

Each time I give something up I feel better. Don't get me wrong. I'm not about to go full hippie-treehugger. I'm simply noticing that many of the devices and services around me provide a redundant function. Internet seems to be capable of replacing most subsciption based offers saving me time and money in the process.

Tue, 10/23/2012 - 23:29 | Link to Comment DaveyJones
DaveyJones's picture

am toying with the thought but the kids would kill me. I prefer to go outside and garden or the web. Why anyone would limit their news and entertainment to those industries is beyond me. 

Wed, 10/24/2012 - 00:30 | Link to Comment SoCalBusted
SoCalBusted's picture

I've read this "I got rid of TV" bullshit for several years.  I think you are all fucking crazy.  TV is the best form of intelligence gathering.  I want to know what the other side is saying.  I want to know what the propaganda machine is spewing.  I want to be able to show my kids the fine bright line between the truth and the lies.

Sticking your head in the sand, covering your ears, eyes and shouting la la la la, doesn't cut it for me.

Keep your friends close and your enemies closer.

Wed, 10/24/2012 - 02:22 | Link to Comment JuliaS
JuliaS's picture

Ahem, are you implying that TV content is not available online? Internet's not just for e-mail and porn, you know.

Wed, 10/24/2012 - 10:48 | Link to Comment Vincent Vega
Vincent Vega's picture

I waged 10 SAE's that I get way more info from my PC and Bloomberg than you garner from TV. Turning off TV does not equal sticking one's head in the sand. Since getting rid of my TV I read much more, I have learned to garden and canning, I have received my HAM radio license, I spend more time exercising, I cook more often/healthier, to name a few.

Tue, 10/23/2012 - 16:50 | Link to Comment insanelysane
insanelysane's picture

The biggest issue with me buying more physical is payments.  What a co-inky-dink.

Tue, 10/23/2012 - 16:52 | Link to Comment Renewable Life
Renewable Life's picture

News Flash....... People don't pay, profits go down!!!!!!

I hope the rest of the tech sector takes notice and so should all non essential sectors, because this story will be coming to every corporation soon!! If people can't pay, or no longer want to pay, for your service or product, your fucked!!!

Reality Bites, doesn't it?

Tue, 10/23/2012 - 16:59 | Link to Comment TruthInSunshine
TruthInSunshine's picture

If I were a turnaround specialist, and advising NFLX, I'd sympathize with their plight, but remind them that literally receiving payments is a core component in terms of running a successful, profitable business.

It would appear that far less expensive, far more reliable, and equal if not better quality content than what NFLX provides can increasingly be found at far more efficient competitors, much of which is or will soon be offered in the streaming variety.

Tue, 10/23/2012 - 18:27 | Link to Comment Water Is Wet
Water Is Wet's picture

I'm going to disagree with your last point.  There are so many shows on Netflix, and it costs $8 a month.  That is less than 1 ticket to 1 movie.  If you are talking about pirating torrents, yeah I guess there are "competitors."  Otherwise, Netflix is a reasonably priced service.

Tue, 10/23/2012 - 19:30 | Link to Comment NidStyles
NidStyles's picture

$8 a month for garbage. Literally, there is nothing on Netflix that you can not get elsewhere for free, or that's worth that $8 a month.

You'd be better off spending that $8 a month on something else, like Silver or food.

 

Tue, 10/23/2012 - 21:53 | Link to Comment TruthInSunshine
TruthInSunshine's picture

@Water Is Wet -

 

On that point you raise, Amazon, just as one example, is offering streaming content now. It's in its infancy. I would bet that providing highly subsidized, if not completely free, content, of the HD streaming variety, is on the business plan horizon for many companies, in an effort to lure users and then monetize another aspect of the service, such as advertising (or multiple other aspects).

The fact remains that NFLX has a low cost to entry business model, and lacks anything in terms of a significant proprietary moat to ward off competitors.

NFLX is particularly vulnerable because it doesn't even own the infrastructure it depends on to pipe its content to its end customers.

Tue, 10/23/2012 - 16:53 | Link to Comment JPM Hater001
JPM Hater001's picture

Since it's NETFLIX it is only right to use a movie to describe the results. 

The Postman trying to deliver mail to Waterworld.

 

Tue, 10/23/2012 - 17:13 | Link to Comment pods
pods's picture

How about NFLX gets to play Alderaan in Star Wars?

pods

Tue, 10/23/2012 - 17:29 | Link to Comment Tijuana Donkey Show
Tijuana Donkey Show's picture

It's as if a million longs screamed out all at once, and then went silent. Cue the R2D2 algo bot to make a run on the death market star.

Tue, 10/23/2012 - 17:46 | Link to Comment Orly
Orly's picture

Wow, two Costner references slipped in there.  Where's Elliot Ness when you need him, playing baseball?

:L

Tue, 10/23/2012 - 16:54 | Link to Comment soopy
soopy's picture

Lol Morgan Stanley upgrade

Tue, 10/23/2012 - 16:55 | Link to Comment fuu
fuu's picture

lulz

Tue, 10/23/2012 - 17:49 | Link to Comment slaughterer
slaughterer's picture

MS and Citi will raise PTs on NFLX in the morning.  

Tue, 10/23/2012 - 18:38 | Link to Comment fuu
fuu's picture

So MS and Citi need out of netflix before it falls any lower?

Tue, 10/23/2012 - 16:57 | Link to Comment Taterboy
Taterboy's picture

I'm gonna call up on my Obama phone and demand Obama NetFlix!

Tue, 10/23/2012 - 17:06 | Link to Comment The Gooch
The Gooch's picture

"The check is in the mail!"

Until it's not.

Tue, 10/23/2012 - 17:07 | Link to Comment Seasmoke
Seasmoke's picture

making the sale , is always the easy part

Tue, 10/23/2012 - 17:08 | Link to Comment The Gooch
The Gooch's picture

"Third prize is YOU'RE FIRED!"

Wed, 10/24/2012 - 04:23 | Link to Comment MisterMousePotato
MisterMousePotato's picture

I thought that was second prize?!?

Or was second prize the steak knives?

Man, that movie has given me nightmares for a decade or more.

Sad, sad tale.

Tue, 10/23/2012 - 17:07 | Link to Comment fireangelmaverick
fireangelmaverick's picture

Next quarter: "Our business would be much better if our basic business model did not suck."

 

Tue, 10/23/2012 - 17:11 | Link to Comment NotApplicable
NotApplicable's picture

Who needs Netflix when the election circus is EVERYWHERE?

Tue, 10/23/2012 - 17:10 | Link to Comment DaveyJones
DaveyJones's picture

The biggest issue holding back much stronger democracy is representation.

Tue, 10/23/2012 - 17:15 | Link to Comment The Gooch
The Gooch's picture

The only thing holding up the REPUBLIC is pussification.

Tue, 10/23/2012 - 17:15 | Link to Comment slaughterer
slaughterer's picture

Love these ZH Schadenfreude hit pieces on NFLX every 3 months.   Hope they keep coming when NFLX is over $100 in a year.  

Tue, 10/23/2012 - 18:01 | Link to Comment Tyler Durden
Tyler Durden's picture

Since they have been coming since NFLX was at $250+, that is a fair probability. We of course hope there is a short squeeze strong enough to send the stock over $100, as fundamentals at this point alone won't do it.

Tue, 10/23/2012 - 18:19 | Link to Comment slaughterer
slaughterer's picture

Once NFLX is analyzed in the same way as AMZN, the sky is the limit.  But with a short float of 30% of available shares, a squeeze should get NFLX half way to $100.  

Wed, 10/24/2012 - 02:49 | Link to Comment DTCC 1999
DTCC 1999's picture

I didn't think these NETFLIX hits were coming from the Tylers.  Rather, submitted by anonymous content contributors under false pretense of overvaluation complaints for prospective investors, when the actual motivation was to punish netflix for mainstreaming certain content which can be viewed for what amounts to loose change each day.
 
Apologies to ZH's designated psy-ops members if mistaken, it can be hard to tell the difference sometimes - sucks to be wrong and sound paranoid when I'm not paranoid enough as is.  

Here is why you are wrong in doing this to Netflix and should stop Tyler (even if you feel the stock price valuations are too high or that Internet tv isn't the future): 

1. They the offer an entertainment package that is arguably unrivaled for the cost, paying their talent, employing American tech support.  

2. Marla stopped expressing herself here after half a dozen death threats.  To bash the multinational nice guy corp who doesn't offer the dissuasion of being morally devoid, predatory in nature, criminally incline and having subverted the peoples Republic; is cowardly and a poor example for those looking to ZH for grounding and guidance. 

3. What you are writing doesn't make any f$&#ing sense.  Last time it was bashing the CEO for an amicably written contrary POV (with the rational given) to someone saying their stock should be shorted and the stock gained almost 70% in the next six months.  

Now you cherry pick the "collecting payment" quote out of context - it some how being bad to state the obvious?  That was in reference to the Latin American segment of subscribers ONLY who make up only a few % of paying customers and the overseas money suck has been from costs of advertising and I'd imagine buying rights to shows / movies in languages the ppl in those countries can understand.   

How about giving homework assignments to your followers that force them to find information on their own, draw conclusions, discuss it in the thread.    The reading comprehension here is near nonexistent.   

You're cause is too important (even though before the dollar was taken off the gold standard the USA as a nation only owned a few % of the gold holdings).

Tue, 10/23/2012 - 17:20 | Link to Comment devo
devo's picture

Buying Netflix on the dips is like chasing an ex-girlfriend, finally getting her back, and finding out she has 5 STDs after consumation.

(or so I imagine)

Tue, 10/23/2012 - 18:11 | Link to Comment Jake88
Jake88's picture

Just whip it.

Tue, 10/23/2012 - 23:32 | Link to Comment DaveyJones
DaveyJones's picture

most folks live within their parentheses

Tue, 10/23/2012 - 17:20 | Link to Comment icanhasbailout
icanhasbailout's picture

I think Netflix's support of SOPA hurt them more than anyone wants to admit. Getting a reputation as a copyright troll supporter is a very very very bad thing to do for an Internet company.

Tue, 10/23/2012 - 17:20 | Link to Comment oldfruit1
oldfruit1's picture

Tyler, whats your view of of Facebook results?

Are these numbers for real? Seems a bit of a coincidence that nos came in pretty much in line with estimates (with no guidance either).  How come they doing ok with advertisement revs when google is getting its face ripped off in the same market?

fruity

 

Tue, 10/23/2012 - 17:22 | Link to Comment pursueliberty
pursueliberty's picture

I'm confused, how does one go about not paying netflix.  I figured you had to have a credit/debit card to sign up and thus it would be withdrawled at the same time each month.

Tue, 10/23/2012 - 18:08 | Link to Comment Jake88
Jake88's picture

Are people being denied credit for not paying on their cards.  That would sound like a serious situation unfolding.

Tue, 10/23/2012 - 18:10 | Link to Comment cxl9
cxl9's picture

That was my thought, too. If you read the letter, you discover that this quote is taken out of context and is therefore somewhat misleading. The "payment" problem is specifically in reference to the Latin American market where many subscribers are unwilling or unable to provide a debit/credit card, and charge declines are higher than in other regions. There are a variety of reasons for this, which the reader may be left to ponder.

Tue, 10/23/2012 - 18:40 | Link to Comment Prometheus418
Prometheus418's picture

I actually liked Netflix, and my wife and daughter loved it.  The problem was that while they were not that expensive, and I might have kept it, my budget has been tight enough after paying the bills that thier payment each month (which always seemed to be a day or two before my payroll deposit) ended up getting me an extra $30 charge, almost without fail.

Yeah, yeah, I know- you're all wealthy enough to wonder how a guy can have less than $20 in his checking account a few days before payday, but for most of us still rolling around with the dogs, that is apparently the new normal.

If Netflix would have been more flexible with their payment options, I would have kept it- paying $20 every four weeks would not have been too much- but having a rotating charge that came every 28-31 days depending on the month made it a bad deal.

So yeah, it was a payment issue.

Tue, 10/23/2012 - 18:42 | Link to Comment blunderdog
blunderdog's picture

I've seen many "special offers" to receive some kind of hobbled subscription for free...could it be that there's some way to maintain a "free" subscription past an expiration period?

"Free to join, pay for features" is a common pricing model for online gaming--if Netflix is toying with that approach, that might be what they're referring to.

Tue, 10/23/2012 - 17:23 | Link to Comment Yen Cross
Yen Cross's picture

 Long "eyecare" of any sort. NFLX on (5- 7) inch screens can't be good for you!  Shit, my eyes were strained back in the 70's on those B&W mini T.Vs with antennas.

Tue, 10/23/2012 - 17:26 | Link to Comment tawse57
tawse57's picture

Won't the banks just wait a month and do another short squeeze pumping it back up again?

Tue, 10/23/2012 - 17:26 | Link to Comment Frank N. Beans
Frank N. Beans's picture

"...  So  our  movie  offering  is  substantially, but not amazingly, better thanother movie options for consumers"

why did they stick "but not amazingly" into that sentence?  would have been better without it. 

koookyyyy

 

Tue, 10/23/2012 - 18:01 | Link to Comment walküre
walküre's picture

Good catch. Is this another release desaster as GOOG earlier? Who wrote that piece? Some stoned out kid in San Bruno?

LOVEfilm should be great. Is that the NFLX PORN version? Seems to do reasonably, but not amazingly well in UK/Ireland when they're not shagging sheep.

Tue, 10/23/2012 - 17:30 | Link to Comment sansnobel
sansnobel's picture

Oh don't worry your pretty little hedge fund heads, Uncle Benny Bucks  will come in and bail them out too if TSHTF.  There is no failure anymore for corporate jackassery.   I guess I need to go make myself into an LLC so I can be wreckless too and get gubment cheese like all the other pigs at the trough.  Maybe Netflix needs to lobby harder and get Uncle Sham to pic up the tab for all the people that would be buying monthly subscriptions to Netflix if they only had a snapcardlike situation.  I mean the economy would recover in no time flat if we could just get that into a bill.  I mean ask Nancy Pelosi, she seems to be the resident expert on economic multipliers and aggregate demand.  

Tue, 10/23/2012 - 17:36 | Link to Comment Orly
Orly's picture

Mr. Softy is making a giant step to play in this market with its $99 X-Box.  Games, TV, Internet, all on your "family entertainment center."  Gold packages are $14.99/month and will effectively eliminate NetFlix, RedBox and OnDemand movie streaming.

Expect MSFT to make a play for NetFlix and buy it for what will turn out to be an extremely cheap price.  Ballmer may look like a bad imitation of Peter Boyle in Young Frankenstein, but I assure you, this aquisition will be the best thing to happen to MicroSoft since Windows 8 and will redefine not only the company but will also move forward the idea of an all-encompassing communication platform for the home.

It was Steve Jobs' vision but, once again, Gates' company will sweep it away from him.

Watch this space.

:D

Tue, 10/23/2012 - 17:47 | Link to Comment Cathartes Aura
Cathartes Aura's picture

ahhh yes, the X-Box eye in the corner of the room, courtesy Mr. G, one cool, cheap package of surveillance, a must have. . .

Tue, 10/23/2012 - 18:00 | Link to Comment Orly
Orly's picture

Two words: duct tape!

Tue, 10/23/2012 - 18:22 | Link to Comment Cathartes Aura
Cathartes Aura's picture

another pair:  don't own!

heh.

Tue, 10/23/2012 - 17:47 | Link to Comment Yen Cross
Yen Cross's picture

Hi Orly. Hope you are being treated well.

Tue, 10/23/2012 - 18:00 | Link to Comment Orly
Orly's picture

Greetings, YC.  Yes, I certainly cannot complain, though I still do, often enough.  :/

Say, what's your take on the Euro?  I think something big'll happen tomorrow in the Fed announcement and the EURUSD pair ramps to the high heaven.  Funny thing is, the USDJPY is acting like the dollar wants to become a safe-haven currency again but I can't tell whether it is all noise from the equity market sell-off or if it's for real.

What say you?

Tue, 10/23/2012 - 18:30 | Link to Comment Yen Cross
Yen Cross's picture

 Hi Orly. Don't trade the Euro. SWAPS & OIS market are propping it. Not too worried about the Fed. They are all in, and  a boost in 200-500K (MBS)transactions aren't going to happen before the elections.

 The usd/jpy is probably a decent R/R, but I'm staying away from the crosses. When you have aud/jpy @ 82 with earnings like this?

  I still like gbp/jpy, if traded well. Watch eur/gbp for guidance. The (DXY), looks like it wants to consolidate before the test of that 80.20 area. (looking stretched on the h-4 chart)

  FX risk and Bond markets seem to be in denial? I sure would appreciate your thoughts on this crazy trade.

Tue, 10/23/2012 - 18:46 | Link to Comment Orly
Orly's picture

Which trade?  You mentioned several.

If it is about the movement in the US 10-year, it is not behaving as though there is any stress in equities whatsoever, which would leave me to believe that there will be something in Dr. Bernanke's announcement tomorrow.  Also, the USDJPY pair is mirroring the ten-year yield, as usual.  What the recent ramp means, I am not sure, though it could easily mean that equities will be allowed to dwindle from here, though in a slow-motion burn.

The $85B/mo. in QEtc. is priced into the market for the next ten months, so there will have to be something fairly major, or expect a crazy reation out of equities, meaning another 25-30 point drop in the US.

Will they allow that before the election?  Or is that the plan in order to assure a Romney victory?  it is very difficult to tell what TPTB have up their sleeves.

 

Tue, 10/23/2012 - 18:50 | Link to Comment Yen Cross
Yen Cross's picture

Always appreciate your thoughts Orly.  Thank you.

Tue, 10/23/2012 - 17:46 | Link to Comment Zero Govt
Zero Govt's picture

"Everyone's favorite Whitney Tilson repeat-endorsed, slow motion trainwreck, NetFlix..."

Talk about not a nice way to be introduced at a dinner party ...i'd try to melt into the carpet after that ! 


Tue, 10/23/2012 - 18:22 | Link to Comment marginnayan
marginnayan's picture

Wow, so many posts. looks like good days are coming.

Any other big casualty in AHs!

 

Tue, 10/23/2012 - 18:27 | Link to Comment MikeMcGspot
MikeMcGspot's picture

Being a pop culture moron, I learned a bit of this business reading Ellie's report and comments.

I wonder how agressively they handle  declines?

There is usually some good meat on those bones in terms of customer retention and collections revenue but you got to hit it quick.

The cost of content seems so high, I also wonder if market forces will start to drive content prices down too.

Thanks for the heads up on MSFT Orly.

Tue, 10/23/2012 - 18:32 | Link to Comment Orly
Orly's picture

As long as you realise it is just an opinion, as I live nowhere near Washington State...

:)

Tue, 10/23/2012 - 18:46 | Link to Comment toomanyfakecons...
toomanyfakeconservatives's picture

Hey... I still use Netflix to watch the documentaries.

Tue, 10/23/2012 - 18:48 | Link to Comment Shizzmoney
Shizzmoney's picture

Memo to NetFlix: I can download all of the stuff you have on the internetz for FREE

Tue, 10/23/2012 - 19:08 | Link to Comment q99x2
q99x2's picture

Looks like the banksters want Romney in to kill the poor arab children. Obama accounting ain't being used this round.

Tue, 10/23/2012 - 19:16 | Link to Comment The Alarmist
The Alarmist's picture

What? Customers are actually expected to pay for shit they buy? I thought we got over that anachronism with the deflation of the real estate bubble.

Tue, 10/23/2012 - 19:31 | Link to Comment UGrev
UGrev's picture

Hey Netflix.. thanks for the free 30 days.. time to cancel again :)

Tue, 10/23/2012 - 19:55 | Link to Comment X86BSD
X86BSD's picture

I think I subbed for like 2 weeks before it dawned on my I wasnt able to stream any HD content. Then I stopped paying. VUDU is where I get the best HD content. And by HD I mean 1080p not 720 or 1080i.

Tue, 10/23/2012 - 20:00 | Link to Comment jmcadg
jmcadg's picture

Netflix have yet to realise that you only need the free 30 day trial to see every film they have then cancel.

Dire selection.

Fri, 10/26/2012 - 00:18 | Link to Comment MikeMcGspot
MikeMcGspot's picture

As shared earlier, the missing point with this company is how they are handling decline reports.

Meat is on the bone, for contact settlement or simply getting a new CC #, if you sell a good service that people really like and want.

Communication is the key. Time is of he essence in customer care.

You would be surprised how many folks lose their cards, and are more than happy to give you the new number if you get them quick.

The balance sheet of a good company should include a line for collections and customer retention under cost of doing business to respect for the folks you provide service to.

When you have a contract breakdown it is up to the corp to reach out and cut a deal.

The Netflix reports don't speak to this. Their customers are not included in the picture in terms of commitment.

Future good financial reporting for most companies should include, weekly decline rates, collections from declines, customer retention rates from declines,

new sales persistance, credit expansion, and customer satisfaction.

Meat on the bone.

Match this up to your merchant charge back rate, compare it to a bunch of other companies and if your in the bottom 5% you may make it.

You can have all the glorious prospectus you want, but if you cant have a + most months on the cash flow side you are a just another bitch slave to debt.

With a little luck you may get a fine reach around from your bank in recopricity for your fine handy acceptance.

Going down in a fine confligration of mutual masterbation.

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