By Lisa Richwine
April 23 Netflix Inc projected slower
subscriber growth for its key U.S. video-streaming service,
disappointing investors and sending its shares down 17 percent.
While Netflix reported a first-quarter loss that was not as
steep as Wall Street projected, it warned that domestic
streaming additions in the second quarter would be below that
seen during the same period in 2010.
The stock plunged 17 percent to $84.85 in after-hours
trading, down from a close at $101.84 on Nasdaq.
Despite predicting total U.S. streaming-subscriber additions
in 2012 would be "about the same as in 2010," the nearer-term
guidance rattled investors, said Wedbush Securities analyst
Adding customers to the instant-streaming business is key to
the company's future as it moves away from mailing DVDs in its
signature red envelopes.
"They are giving a signal to the Street their growth story
is over," said Pachter, who rates Netflix a "sell."
Netflix never fully recovered credibility with investors
after a price-hike and plan to hive off its DVD business --
quickly abandoned -- sparked cancellations by angry customers
Once one of Wall Street's highest-flying stocks, its shares
dropped from $304.79 in July to $62.37 in November.
For the first quarter, Netflix posted revenue of $870
million, up 21 percent from a year earlier. The company had a
net loss of $4.6 million or 8 cents per share in the quarter,
versus a net profit of $60.2 million a year earlier.
Analysts had expected a loss of 27 cents per share,
according to Thomson Reuters I/B/E/S.
The company added 1.7 million U.S. streaming customers in
the quarter, while losing about 1.1 million U.S. DVD
Netflix is facing growing costs to add movies and TV shows
to its streaming business at the same time it expands into
Canada, Latin America and Britain and has attributed its
quarterly loss to start-up costs abroad.
On Monday, Netflix said it expected to return to
profitability in the second quarter and launch in another
European market in the fourth quarter of this year.
The move into another market may have added to concerns
among investors, said Gabelli & Co analyst Brett Harriss.
"It's very aggressive. I think investors are gun-shy from
their last aggressive move" into foreign markets, said Harriss,
who has a "hold" rating on Netflix.