Netflix's fourth quarter restores company's investment luster

The results announced Wednesday served as a resounding endorsement of Netflix Inc. CEO Reed Hastings, who has been spending heavily to license more compelling movies and TV shows in hopes of warding off intensifying competitive threats. Companies such as Amazon.com Inc. and Coinstar Inc.'s Redbox have expanded into streaming video to Internet-connected devices to compete with Netflix.

Hastings' strategy has been met with widespread skepticism, but it paid off during the final three months of last year.

Netflix gained 2 million video-streaming subscribers in the U.S. during the quarter, propelling the company to a profit during a period that was supposed to produce a loss. In a letter to investors, Hastings credited the gains to people's interest in watching a wide range of entertainment on the tablet computers and Internet-connected TVs that they got as holiday gifts.

“As the sales of tablets go, apparently so go the fortunes of Netflix,” Wedbush Securities analyst Michael Pachter said.

Investors were euphoric. Netflix's volatile stock soared US$36.24, or more than 35 percent, to US$139.50 in extended trading after the numbers came out. If the rally carries over into Thursday's regular trading, Netflix's stock would hit a new 52-week high. It would also mark a nearly 80-percent increase since the company's early December announcement of a licensing deal with The Walt Disney Co. for exclusive streaming rights to new movies beginning in 2016.

The upturn in Netflix's stock has been a boon for billionaire investor Carl Icahn, who began accumulating a 10-percent stake in the company in early September when the stock was trading below US$55.

Despite the recent rebound, Netflix's stock remains well below its peak price of nearly US$305 reached in July 2011. That was around the same time the company outraged subscribers with a change that increased prices by as much as 60 percent for those who wanted to stream video and still rent DVDs through the mail. Hastings has been scrambling to make amends since the backlash triggered mass cancellations.

1|2|Next Page>>

SHARE CLOSE
Blogger		Google+
Live Journal		Plurk
Stumble Upon

Tweet

	PREVIOUS ARTICLE
	Amgen fourth-quarter profit drops 16 percent due to higher spending

NEXT ARTICLE
Coach Inc. shares plunge on challenging holiday quarter

Write a Comment

Terms

Enter your comments - 3000 characters max

Type in image code

 Receive China Post promos
 Respond to this email

Submit