The Plot Gets Upbeat For Netflix

We could talk about Apple’s disconcerting results, McDonald’s tepid expectations or the high price of tea (and everything else) in China, but why not head toward the end of the week with an upbeat story line? Netflix.

“A Resurgent Netflix Beats Projections, Even Its Own,” crows the hed over Brian Stelter’s piece in the New York Times. “For all those who have doubted its business acumen, Netflix had a resounding answer on Wednesday: 27.15 million,” he writes. 

That’s 2.05 more million streaming customers in the U.S. in the fourth quarter than Netflix had in the third. 

“It’s risen from the ashes,” Lazard Capital Markets senior analyst Barton Crocket tells Stelter. “A lot of investors have been very skeptical that Netflix will work. With this earnings report, they’re making a strong argument that the business is real, that it will work.”

The holiday season was “particularly strong, driven by consumers buying new electronic devices, including tablets and smart TVs” that offer Netflix’s service, CEO Reed Hastings and CFO David Wells said in a letter to investors, Reuters’ Lisa Richwine reports.

“As the sales of tablets go, apparently so go the fortunes of Netflix,” Wedbush Securities analyst Michael Pachter tells the AP’s Michael Liedtke. 

But that’s only part of the story. Netflix, you’ll recall, suffered a huge backlash from consumers when it separated its DVD-by-mail business from streaming, in effect raising prices by about 60%. But it has pounded away at those defectors in eat-crow emails over the months, offering a month of free service to try out what is undoubtedly a more robust plate of offerings. Customers seem to like what they can see.

“Netflix continues to invest in exclusive content to differentiate its service -- including the deal that will allow it to offer Disney, Pixar, Marvel and Lucasfilm movies at a time when such movies have typically been found on premium cable TV networks,” Dawn C. Chmielewski reports in the Los Angeles Times. “It also has invested in such high-profile original series as “House of Cards,” created by director David Fincher and starring Kevin Spacey and Robin Wright.”

Netflix also appears to be hitting its stride as an alternative distribution vehicle for niche movies and documentaries, as Deadline Hollywood’s Nellie Andreeva pointed out when it acquired the rights to Morgan Spurlock’s comedic documentary “Mansome” for the U.S., U.K. and Canada in September. 

Indeed, Ellen Bryon reported in the Wall Street Journal earlier this week that juicers have been flying off retailers’ shelves since a 2010 documentary, “Fat, Sick and Nearly Dead,” hit Netflix in July 2011. The film, which chronicles the 60-day juicing diet of an Aussie who comes to the U.S. to shed a lifetime of accumulated fat through a medically supervised diet of liquid veggies and fruit, had limited distribution in theaters.

“After the film, there was a groundswell,” Jack Schwefel, CEO of retailer Sur La Table, tells Bryon, adding he expects 2013 juicer sales to rise 60%.

After-hours trading added as much as one-third to the company’s share price last night, Wired’s Marcus Wohlsen writes, and if the “enthusiasm carries over past the opening bell” today, its shares will top their 52-week high of $133.43. But, as he points out, “that price pales compared to the company’s 2011 flirtation with $300.”

Carl Icahn is one happy camper after yesterday’s Fourth Quarter 2012 Earnings Q&A Session, which you can listen to here

“We still own every share we bought, and we believe it’s still got tremendous potential,” Icahn, the patient investor formerly known as a ruthless corporate raider tells Bloomberg’s Meg Tirrell. “One of the parameters we use is when everybody doesn’t like something, that’s when you buy it.” 

And so it is that the roughly 5.54 million shares and options he purchased in the fall for $168.9 million, when the stock was trading at about $58, are worth about $453 million this morning. That’s about 10% of the company.

Icahn was also speaking nicey-nice about CEO Hastings yesterday, saying he’s “always found him to be an extremely bright and engaging guy,” after issuing “blistering” comments about Netflix’ “poor corporate governance” when it issued a poison pill in November to protect itself against a forced sale. 

“We have no further news about [Icahn’s] intentions, but have had constructive conversations with him about building a more valuable company,” Netflix said in it statement yesterday.

This is the kind of original programming you normally see in fairy tales, isn’t it?

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