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Netflix investors cheer world of opportunity

Monday, July 21, 2014 - 02:31

Details on a potentially very lucrative international expansion sent Netflix shares higher in after hours trading, overshadowing a slight miss on earnings per share. Bobbi Rebell reports.

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For Netflix, the world is their oyster- and investors are on board. Shares of the streaming media company moved higher after the company detailed its European expansion plans. Starting in September, opening a market of more than 180 million households, about double the U.S. market. That could really change how much the company is worth, says BMO Capital Markets' Ed Williams: SOUNDBITE: ED WILLIAMS, MANAGING DIRECTOR, BMO CAPITAL MARKETS (ENGLISH) SAYING: "So do we look at Netflix and say that in 5 years or some period along those lines, the number of subscribers that they have in international markets could significantly outpace the number of subscribers in the U.S. market? And if that were to be the case and the profitability metrics were to be comparable to what we currently see in the U.S., then we have to kind of re-assess what the ultimate business is worth. " Right now, Williams says the stock, which is up more than 70 percent over the last year, has gotten ahead of itself. Netflix's investment in original programming- like 'House of Cards' and "Orange is the New Black"- has paid off with 31 Emmy nominations and creating somewhat of a buffer against rivals like Amazon and Hulu. Subscriber growth is now past 50 million streaming members despite raising prices by a dollar for new customers. And with those price hikes, Netflix says they will make more money on each customer. Although they missed estimates by a penny, profits were more than double a year ago. But the company says it is carefully watching what's going on around it with the net neutrality debate- because it depends on other companies to get their content to customers as smoothly as possible. SOUNDBITE: ED WILLIAMS, MANAGING DIRECTOR, BMO CAPITAL MARKETS (ENGLISH) SAYING: "How much of an issue does it become, I think, is going to come down to what the government allows in terms of a Time Warner Cable/ Comcast merger, in terms of other steps along those lines that could lead to consolidation for companies. Does Fox end up buying a time warner, the studio business as well. So do you start to see things shake out where the pipes - if you will - are able to extract a toll on the customer and that is something that obviously Netflix does not want" But given that Netflix streaming accounts for nearly one-third of all internet traffic in North America during peak times, that could end up costing them, and their customers.

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Netflix investors cheer world of opportunity

Monday, July 21, 2014 - 02:31

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