UPDATE 3-Netflix Q3 profit up, but investors want more

* Q3 EPS 52 cents vs Street view 45 cents

* Raises full-year subscriber and revenue forecasts

* Keeps fourth-quarter profit outlook unchanged

* Shares fall 5 pct after hours (Adds comment from conference call)

By Sue Zeidler

LOS ANGELES, Oct 22 (Reuters) - Netflix Inc (NFLX.O) posted a sharply higher quarterly profit, but its shares fell on disappointment the online DVD rental company did not exceed subscriber targets or raise its fourth-quarter earnings outlook.

Netflix, which has grown as traditional brick and mortar outlets such as Blockbuster Inc (BBI.N) have struggled, ended the third quarter with 11.1 million subscribers. The company had expected to finish with 10.9 million to 11.1 million users.

"People expect a lot from Netflix. They expected it to blow away subscriber numbers in the third quarter, but it really just came in at the high end of forecasts," said Barton Crockett, an analyst with Lazard Capital Markets.

Net subscribers rose by 510,000 in the quarter compared with an increase of 261,000 a year earlier.

On a call with analysts, Netflix Chief Executive Reed Hastings said Netflix will announce a deal this year with a consumer electronics firm with a "material installed base."

"I would assume that they're talking about a deal with (Nintendo Co Ltd's (7974.OS)) Wii console or (Sony Corp's (6758.T)) PS3 console because they emphasized the size of the installed base, and videogame consoles are the primary devices people have that are connected to the TV and the Internet," Crockett said.

Shares of the company that offers DVDs via subscription and an online mailing service fell after-hours to $47.05, after closing up about 3.7 percent at $49.63 a share on Nasdaq.

Netflix said net profit for the third quarter rose to $30.1 million, or 52 cents per share, from $20.4 million, or 33 cents per share, a year earlier.

Analysts on average had been expecting earnings of 45 cents per share, according to Thomson Reuters I/B/E/S.

"The numbers were a little better than expected, but the stock is probably down on profit taking after running up earlier in anticipation," said Edward Woo, an analyst with Wedbush Morgan Securities.

For the fourth quarter, Netflix raised its revenue forecast to a range of $440 million to $446 million, up from $431 million to $445 million and roughly in line with Wall Street's estimates of $442 million.