Around the Net

Commentary

Netflix Q4 Revs Exceed Expectations

Still smarting from a tough 2011, rising revenue helped Netflix beat lowered profit goals in the fourth quarter. 

“Struggling to win back customer faith,” the online video-rental service “took a baby step toward redemption,” reports CNet. “Ahead of releasing their fourth-quarter earnings … Netflix had given investors plenty of reason to expect unpleasant results,” writes WebProNews. “Surprisingly, Netflix announced that they actually exceeded Wall Street’s expectations.”

The company reported global revenue of $876 million -- up 47% year-over-year. Net income was down 15% to $40.7 million, but still managed to beat analyst expectations. 

Writes an awfully generous VentureBeat: “Netflix is once again the darling investment among Wall Street analysts (for the most part).” “Investors are pleased,” concedes AllThingsD.

advertisement

advertisement

“While the streaming business is growing (adding 220 subscribers domestically in the quarter), and the DVD business sis shrinking (it lost 2.76 million subscribers domestically), it’s [sic] margins are much worse than the legacy DVD business,” notes TechCrunch. Unfortunately, “The streaming business has an 11 percent profit margin, compared to a very healthy 52 percent margin for the DVD business.”

“With the decline of the DVD business … [Netflix] told investors they should expect modest quarterly losses during 2012, as well as losses for the full calendar year,” reports paidContent

“The company had already warned that it may not turn a profit in 2012, and it is now being more explicit about that, citing expansion costs and diminishing DVD revenue,” adds AllThingsD.

Going forward, “the company is banking on international markets as a big growth driver in the future,” writes The Wall Street Journal. “But as it expands, it has warned that small quarterly losses are likely over the next few quarters.”

Next story loading loading..