Netflix's second-quarter results show improving numbers when it comes to revenue, income, and the number of subscribers -- but investors still aren't all that happy.
In mid-day trading, the price of Netflix shares sank 8% due to revenue that was lower than Wall Street expectations -- and because the company said it expected some negative backlash due to the recent price increases. The company's stock closed down under 2% at $281.53. In after-hours trading, the stock was down over 9%.
Netflix profit was up more than 50% in the second quarter of 2011 to $68.2 million versus $43.5 million for the same period in 2010. Revenue was at $788.6 million versus $519.8 million in the second quarter of 2010. Media analysts were anticipating revenue at around $791.5 million. Subscribers grew 1.8 million to 25.6 million.
Concerning Netflix price hikes, Reed Hastings, CEO, stated: "It is expected and unfortunate that our DVD subscribers who also use streaming don't like our price change. Some subscribers will cancel Netflix or downgrade their Netflix plans." Still, Netflix projects higher revenues and overall gains in total subscribers for its next reporting period.
The company's streaming video business is outgrowing the traditional DVD rental operation -- although it offers a more limited library of TV series and films. But Netflix says customers still like the DVD mailings, which can be more costly to the company.
Netflix has also made some recent non-exclusive library deals with CBS and NBC Universal and has committed to the expensive, new TV series "House of Cards," originally a 1990 British thriller.