Netflix nailed after hours
DVD rental firm tops estimates, cuts prices
By Bambi Francisco, CBS.MarketWatch.com
Last Update: 5:58 PM ET Oct. 14, 2004
SAN FRANCISCO (CBS.MW) -- Shares of Netflix tumbled 37 percent after hours following its earnings report for the third quarter, in which the company said revenue nearly doubled but then announced that it's cutting prices and expects to break even next year.
The DVD rental firm's (NFLX: news, chart, profile) stock ended the regular session up 8 cents at $17.43, but was down $6.43 to $11 after the bell. Trading in the stock was halted for about an hour.
Netflix (NFLX: news, chart, profile) said it earned $18.9 million, or 29 cents per share, up from $3.3 million or 5 cents a share in the year-ago period. Excluding certain items, such as stock-based compensation, Netflix earned $22.6 million, or 35 cents a share, topping analysts' forecasts by 3 cents.
Quarterly revenue nearly doubled to $141.6 million from $72.2 million last year.
The company wrapped the quarter with almost 2.23 million subscribers. The cost to acquire a subscriber was $36.97, up from $31.81 in the year-ago period.
Netflix warned in a statement that it "expects the business environment to become increasingly competitive in the coming year."
During a conference call, company executives said they were cutting the price for its monthly subscription to $18. It had recently been raised to $22. In addition, they said that they expected to break even next year.
In early October, Netflix gave its outlook for the third quarter. At the time, the company told investors that its third-quarter profit would come in "substantially" above its prior outlook due to a couple of factors. The basis for the higher profit margin was fewer rentals in the quarter, as well as a new amortization policy that would amortize the company's movie library over three years rather than one.
|
