Netflix subscriptions boom around world, shares jump 20 pct

LOS ANGELES - Netflix Inc. added over 50 percent more subscribers than expected in the third quarter as original shows such as "Stranger Things" drew new international viewers and kept U.S. customers despite a price hike, sending its shares soaring 20 percent in late trade.

The company broke a two-quarter trend of disappointing subscription growth. Netflix, which has spent heavily to expand outside its home market, also said that it was on track to start harvesting "material global profits" next year, even as it raised spending on original programming.

Shares of Netflix rose to $119.82 in extended trade from a close of $99.80.

Netflix added about 3.20 million subscribers internationally in the third quarter, higher than the 2.01 million average analyst estimate.

In the United States, Netflix added 370,000 subscriptions, compared with analysts' estimate of 309,000, according to research firm FactSet StreetAccount.

"Investors appear laser focused on subscriber growth, and so long as Netflix delivers on that metric, investors will bid its shares up," said Wedbush Securities analyst Michael Pachter. However, Pachter said he thought the continuing cost of developing new shows would undermine plans to deliver material profits in 2017.

Netflix has expanded into more than 130 markets worldwide, including most major countries, except China. It said on Monday it was dropping plans to launch a service in China in the near term, opting instead to license its shows for "modest" revenue,

The company said it still hopes to launch service in China "eventually."

In the meantime, Netflix plans to keep pouring money into building its stable of original and licensed TV shows and movies. Content spending will rise to $6 billion next year, a $1 billion increase from 2016, the company said."We will keep investing in growing the content spend, even domestically, for quite a long time," Chief Executive Reed Hastings said on webcast.

Netflix has been facing a slowdown in subscription growth in the United States as the market matures and a planned U.S. price hike raised concerns it would not hit its targets. It also faces competition from the likes of Hulu and Amazon.com Inc.

But the company, whose other popular original shows include "Orange is the New Black" and "House of Cards", said it expects to add 1.45 million subscribers in the United States in the current quarter.

Analysts on average were expecting 1.27 million additions, according to research firm FactSet StreetAccount.

"Netflix has successfully navigated the challenges of a price increase," retail research group Conlumino said in a note, adding that it had been "somewhat less successful" in maintaining subscriber growth.

In its international markets, it expects subscriber additions of 3.75 million, compared with the average analyst estimate of 3.32 million.

Third-quarter revenue rose 31.7 percent to $2.29 billion.

Netflix's shares have surged in the past few years, driven by rapid growth as the company redefined television and fueled "binge watching."

The stock, however, was down 12.7 percent this year as investors fretted about slowing growth in its domestic market and increasing competition.

source: www.abs-cbnnews.com

Netflix shares plunge as subscriber forecasts miss estimates

Streaming video service Netflix Inc. forecast US and international subscriptions would grow at a slower pace than Wall Street expected this quarter, sending its shares tumbling eight percent in after-hours trading on Monday.

Netflix said it expected to add about 500,000 customers in the United States in the second quarter that ends in June, compared with Wall Street targets of 586,000, according to FactSet StreetAccount. The forecast includes a "modest impact" from the beginning of a price increase for its monthly movie and TV subscription service, the company said.

The company known for its original shows including "Orange is the New Black" and "House of Cards" said it expected to add about 2 million subscribers in markets outside the United States, versus analyst expectations of 3.5 million, according to FactSet. It also reported results for the first quarter, when subscriptions outpaced its own target.

Netflix is prone to large stock price swings as investors bet on the possible success of its mission to redefine television viewing around the world.

The company's long-term results depend in large part on how fast and profitably it expands. Netflix has launched in almost every country in the world, at a substantial cost, and now faces the task of adapting the service to different markets and cultures as competitors also rush in.

In January, Netflix went live in more than 130 countries, a huge global push by Chief Executive Reed Hastings to counter slowing growth in the United States.

Initial sign-ups were limited in some countries because the service at this point offers only English-language content and does not accept all of the local payment options, Hastings said on Monday.

"Over the next couple years as we further localize, we'll be able to see more opportunity," Hastings told analysts on a conference call. Netflix has not yet launched in China, where it has been exploring an entry for some time. It said on Monday it was "continuing discussions" and that "whatever we do," the Chinese market would have only a modest financial effect near-term.

The company previously promised "material" global profit in 2017 as it begins to reap the benefits of its costly expansion. A spokeswoman said Netflix is sticking with that forecast.

"I think that people who relied on unbridled international growth are beginning to have second thoughts, and the company now faces domestic competition that may limit its ability to grow domestic profitability," said Wedbush Securities analyst Michael Pachter, who has an "underperform" rating on the stock.

Amazon.com Inc announced it would offer its video streaming service as a standalone monthly subscription as it looks to drive membership in its Prime subscription service.

Netflix said its forecast for fewer international additions than the prior year was due to tough comparisons with the year-ago period when it had launched in Australia and New Zealand.

The company will start boosting rates for more than half of its U.S. members from May.

"We are rolling this out slowly over the year, rather than mostly in May, so we can learn as we go," the company said in a statement.

Netflix also said it expected to increase its spending on movie and TV content from about $5 billion in 2016 to more than $6 billion in 2017.

From January through March, Netflix added 6.7 million subscribers, bringing its worldwide total to 81.5 million.

Net income for the quarter was $28 million. Earnings per share came in at 6 cents, beating the forecast of 5 cents from analysts surveyed by Thomson Reuters I/B/E/S.

Over the past year, Netflix stock had risen more than 60 percent, making it the No. 3 performer on the S&P 500.

The company's shares were down 8 percent at $99.70 in after-hours trading on Monday.

source: www.abs-cbnnews.com

Netflix global push grabs more customers than expected

Netflix Inc.'s aggressive push into international markets won more customers than the video streaming service and its investors expected last quarter, sending its shares surging 7 percent.

The dominant online video company said on Tuesday it had 74.8 million subscribers at the end of December and forecast 6.1 million more through March, fueled by its expansion this month into virtually every country except China, where it is exploring ways to launch its service.

The projection is more bullish than the 4.94 million average estimate of analysts surveyed by FactSet StreetAccount.

Shares of Netflix rose 7 percent to $115.42 in after-hours trading.

Netflix, which started sending DVDs to customers by mail two decades ago, now offers its subscribers unlimited online access to TV shows and movies from Hollywood studios plus its own original shows such as "House of Cards" and "Orange is the New Black."

New customers overseas are countering slowing growth for Netflix in the United States, the company's biggest market. It added 1.56 million U.S. subscribers in the fourth quarter, below the 1.65 million it forecast, and less than 1.9 million a year earlier.

"Our high penetration in the U.S. seems to be making net additions harder than in the past," the company said in a quarterly letter to shareholders.

Netflix said it expects U.S. subscribers to jump 1.75 million this quarter. The company will likely benefit from the return of hit show "House of Cards" and a traditional bump in interest at the start of the year from people with new TV sets.

Internationally, Netflix added 4.04 million subscribers, compared with its estimate of 3.50 million. Netflix does not break down where its international subscribers are based.

From January through March, the company expects to add about 4.35 million international subscribers.

"The rollout in 130 countries in early January ensures that they will have no problem hitting their international target," Wedbush Securities analyst Michael Pachter said.

Netflix said it may be able to start a service in China this year, but it may take longer. "We have work and uncertainty ahead," the company said in its investor letter. "Our expectations are modest and long-term."

Netflix said revenue rose 22.8 percent to $1.82 billion in the December quarter. Analysts on average had expected revenue of $1.83 billion, according to Thomson Reuters I/B/E/S.

Excluding items, Netflix earned 7 cents per share, ahead of analysts' average estimate of 2 cents per share.

source: www.abs-cbnnews.com