Netflix (Nasdaq:NFLX) Beats Estimates But Lowers Outlook: Aftermarket -15%

Tomahawk, WI 7/24/12 (StreetBeat) -- Netflix (Nasdaq: NFLX) beat analysts' EPS estimates by more than double but lowered their guidance. This was blood in the water for sellers driving share price down more than 15 percent in aftermarket trading. As I write, shares of Netflix were at $68.80 per share after closing the day up slightly at $80.39 per share.

For the second-quarter, Netflix reported earnings of $0.11 a share on revenue of $889.2 million. Estimates were for earnings of $0.05 a share on revenue of $888.9 million.

A year ago, the company earned $1.11 a share on revenue of $788.6 million.

Netflix projected a weak third-quarter forecast, with results in a range between a loss of ($0.10) a share to a profit of $0.14 a share. Estimates are for earnings of $0.11 a share.

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Thursday’s biggest gaining and declining stocks

Palm Beach, FL 7/5/12 (StreetBeat) – Shares of the following companies made notable moves Thursday in U.S. premarket trade:

Advancers

International Speedway ISCA +2.67% was up 5% after posting jumps in both revenue and profit for its second quarter

Netflix NFLX +11.19% rose 7%, building on gains made in Tuesday’s holiday-shortened session.

OraSure Technologies Inc. OSUR +11.57% rose 7%, extending recent gains that came after the Food and Drug Administration approved the company’s over-the-counter HIV testing kit.

Ross Stores ROST +6.97% gained almost 6% after the retailer posted June same-store sales that topped analyst estimates.

Victoria’s Secret parent Limited Brands Inc. LTD +7.07% gained 5% after it said same-store sales rose 7%, well ahead of the 2.4% increase Wall Street was expecting.

SXC Health Solutions Corp. SXCI +1.88% rose 6%. Credit Suisse reiterated its outperform rating on the health-care firm and said the next major catalyst for the company will be forecasts accompanying second-quarter results.

Decliners

Ambow Education Holding Ltd. AMBO -11.21% fell 9% after the company said late Wednesday it swung to an adjusted first-quarter loss of 14 cents a share, compared with adjusted profit of 4 cents a share in the year-ago period.

Buckle BKE -5.55% was off 5% after reporting drops in both same-store and total sales last month.

Cato Corp. CATO -9.81% was off 6% after it posted a 10% slump in June same-store sales.

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Netflix (Nasdaq: NFLX) Is Cheaper Than You Might Think

Northern, WI 7/5/12 (StreetBeat) – Investors forgive biotechs for the losses they incur during their drug development and testing phases. They look the other way when a fast-growing dot-com is posting losses as it builds out its platform. So why can't Netflix (Nasdaq: NFLX) get a similar pass?

Citigroup analyst Mark Mahaney issued a bullish note on the video service earlier this week, arguing that the company trades for just 12 times its domestic business.

Not even bulls argue that Netflix is cheap on a valuation basis. Netflix is expected to post just a marginal profit this year, and it's trading for more than 30 times next year's projected profitability.

The rub, of course, is the streaming giant's costly overseas expansion. The $67 million contribution profit that Netflix generated in its domestic streaming business during the first three months of this year was more than offset by a $103 million shortfall internationally.

However, Mahaney's compelling earnings multiple in the pre-teens removes the sandbag of losses incurred internationally. He's only looking at the company's 23.4 million stateside streaming accounts -- and its even more lucrative 10.1 million disc-based customers -- to arrive at the earnings multiple of 12. In reiterating his bullish call and a juicy price target of $130, Mahaney prefers to see it as a cheap domestic operator with an international appendage being thrown in for free.

Addition by subtraction
Investors make this mistake often. Zipcar (Nasdaq: ZIP ) is also trading at more than 30 times next year's net-income forecast. Does that make the car-sharing service expensive? Well, let's take a closer at this year's freshman quarter. Zipcar generated $6.8 million in pre-tax operating profit during the seasonally sleepy first three months of this year, but the company reported a small loss for the period as deficits internationally and in its younger stateside markets ate into its healthy established markets.

Why are we punishing these companies for reaching higher? If they were to retreat to their flagship businesses -- in Netflix's case it would be domestic and in Zipcar's case it would be the four major metropolitan markets that make up more than half of its business -- both companies would be very profitable.

Mahaney's approach with Netflix, where he sees its cash-slurping international endeavors as a "free call option," makes sense.

Investors need to reward companies for going big and stop discounting the valuations to the point where the profitable operations are too cheap to ignore.

Yes, Netflix is cheap in a way that a simple eyeballing of a forward earnings multiple will never show you.

Please contact www.thestreetbeat.com for interest in our latest investor relations platform the “CEO Interview Series” with its host Steve Kanaval. The package includes a one-on-one interview with a seasoned industry professional; published segment to our web site with embedded audio/video file; and a compressed file that can be easily e-mailed out to your current and/or potential investors. Please e-mail bflautt@gmail.com or call (662) 392-0740 for pricing and scheduling.

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Netflix (Nasdaq: NFLX) in talks for cable partnership

Austin, Tx 3/7/12 (StreetBeat) -- Netflix (Nasdaq: NFLX) Chief Executive Reed Hastings has quietly met with some of the largest U.S. cable companies in recent weeks to discuss adding the online movie streaming service to their cable offerings, according to sources familiar with matter.

In what would ratchet up its competition with HBO, the talks could lead to Netflix becoming available as another on-demand option for cable subscribers through their set-top boxes, according to three people familiar with the talks. If a partnership came to fruition, a cable operator might offer Netflix as an additional option added onto a subscriber's cable bill, according to a fourth person.

Any partnership would be a major about-face for many in the traditional cable industry who had initially seen Netflix as a threat to their $100 billion-a-year business.

Hastings has strongly hinted at investor conferences in recent weeks about the possibility of Netflix one day being a cable channel rival to premium networks like Time Warner Inc's HBO.

"It's not in the short term, but it's in the natural direction for us in the long term," said Hastings, speaking at an investor conference last week. "Many (cable service providers) would like to have a competitor to HBO, and they would bid us off of HBO."

While most industry watchers considered Hastings' comments as little more than thoughts about the future, people familiar with the talks said he has already met with senior cable executives to discuss how such a partnership might work. At least one cable operator could experiment with offering Netflix by the end of the year, said one of the people.

A Netflix representative declined comment on any talks with cable operators.

While Netflix offers mainly old TV shows and movies through its Web streaming service, it had been seen as a threat by some cable operators and cable networks worried the $7.99 a month service would lead to customers dropping the much more expensive cable TV package, a fear that has become known in the industry as "cord cutting."

Time Warner Inc Chief Executive Jeff Bewkes famously dismissed the idea that Netflix was a serious threat by equating the service to the "Albanian Army." More recently, however, Bewkes and other media chiefs, including Viacom's Philippe Dauman, have been much more positive about Netflix, in part because the service has boosted their coffers by licensing older shows.

Comcast Corp, (Nasdaq: CMCSA) the largest U.S. cable operator, last month launched its own online video service for subscribers called Streampix that is supposed to be its answer to Netflix. Comcast executives say they will do everything they can to keep subscribers watching video through its own systems.

Netflix also faces more competition from incumbents including Verizon Communications' joint venture with Coinstar Inc's Redbox due later this year.

There are also significant plans still in the works at Google Inc, Apple Inc and Amazon.com Inc in the online video space.

Even if a deal is reached in the near-term, actually receiving Netflix through a cable provider could still take months to launch. Hastings would first need to rework his licensing deals with programmers since most existing contracts will not allow Netflix to deliver their shows on a cable box, according to a senior programming executive.

Offering Netflix through a cable package could help the streaming service avoid a separate potential clash with cable operators over rising costs for online video traffic over their Internet pipes. Cable operators are the dominant high speed Internet providers in the U.S. and have been trying to devise methods to manage their costs and traffic of online video.

Time Warner Cable is the first major cable company to stick its neck out with a trial in Texas to charge users for the amount of bandwidth they use. Online video is commonly acknowledged as the heaviest share of Internet traffic.

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Netflix (Nasdaq: NFLX) Surges 22%: Q4 Beats, Q1 Rev View Beats

Palm Beach, FL 1/26/12 (StreetBeat) -- Netflix (Nasdaq: NFLX) this afternoon reported Q4 revenue and profit per share ahead of analysts’ expectations, and forecast the current quarter’s revenue well ahead of expectations, as subscriber numbers began to steady themselves.

Revenue in the three months ended in December rose 47%, year over year, to $876 million, yielding EPS of 73 cents.

Analysts on average had been modeling $857.4 million and 54 cents a share.

The company ended the quarter with 21.67 million domestic streaming subscribers, it said, a gain of 220,000. International streaming subs rose by 380,000, for a total of 1.86 million. Total domestic subscribers, including DVD subscribers, rose by 610,000, ending at 24.4 million.

For the current quarter, the company sees revenue in a range of $842 million to $877 million, ahead of the $846 million average estimate, and a net loss per share of 16 cents to 49 cents, worse than the consensus 29-cent loss. The company projects it will have 22.8 million to 23.6 million total domestic subs this quarter, 2.5 million to 3.1 million International subs, and 9.4 million to 10 million domestic DVD subs.

Management remarked that it was encouraged by progress in winning back subscribers after losses last year:

We are encouraged by the strength in acquisition that we are seeing, coupled with continued improvements in retention among our domestic streaming members. For Q1 to date, our domestic net additions for streaming are tracking close to our net additions in Q1 2010 of 1.7 million net additions. Given this trend, we are comfortable with our ability to continue to expand our domestic streaming contribution margin.

Netflix shares are up $21, or 22%, at $116 in morning trade.

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Netflix (Nasdaq:NFLX) Raises Liquidity Concerns

Swan Lake, MS 11/22/2011 (StreetBeat) – Netflix (Nasdaq:NFLX) announced on Monday several transactions and a troubling 2012 outlook, a sign of the company's deteriorating performance and impact on its liquidity.

The company raised $200 million through the registered sale of common stock to T. Rowe Price and $200 million through a private placement of convertible notes to Technology Crossover Ventures.

Netflix Chief Financial Officer David Wells said these transactions will strengthen the company's balance sheet. But Janney Capital Markets analyst Tony Wible said the moves revive liquidity concerns.

"We believe this dilution reinforces our concerns on Netflix's accounting treatments that we maintain overstate its cash flow..." Wible wrote in a note. "We continue to believe ... that the disparity in Netflix's accounting and the rising cost of content forces it to access capital and raise prices."

Netflix also disclosed that it expects to incur a consolidated net loss in 2012 due to flat revenue and an increase in international investment. The company previously only said that it expected to be unprofitable on a global basis for a few quarters starting in the first quarter of 2012. Wall Street had been expecting 2012 full-year earnings of $1.11 a share.

Wible noted that the issuance raises a fresh batch of questions.

"Investors need to ask why one of the largest subscription-based platforms in the world needs capital. The lack of profitability on almost 23 million global streaming subscribers suggests that this business may not be as lucrative as the bulls believe."

Netflix is raising capital after spending hundreds of millions of dollars repurchasing stock.

"This dynamic reinforces our view that Netflix has been buying stock to offset the dilution from its large issuance of equity to its management team, which has aggressively sold the stock with many options priced as low as $1.50 per share," Wible wrote. "The CEO continues to own no shares directly, although we are encouraged to see that he has stopped selling stock as of early October."

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TV: Not Dead Yet

Palm Beach, FL 11/11/11 (StreetBeat) --A few years ago, many people were predicting the end of television as we know it. The rise of video-on-demand, social games and other Web-based diversions all were supposed to kill TV. Who could possibly want to watch an antiquated, live network or cable show, the theory went, when one could Tweet, surf Facebook or watch something cached on Hulu or streamed on Netflix (Nasdaq: NFLX) instead?

Fast-forward to today. The TV business certainly has undergone some seismic shifts due to new technologie. But the bottom line is, people are still watching the tube. Nielsen predicted that the number of U.S. homes with TV access would hit 115.9 million in the 2010-11 season, up 1 million from the year before and representing an all-time high. American teenagers, one of the most tech-savvy segments of the population, have seen their TV viewership actually increase six percent in the last five years, according to a Nielsen report. And major, live TV events continue to draw enormous audiences: 111 million viewers in the U.S. watched the Green Bay Packers beat the Pittsburgh Steelers in the 2011 Super Bowl, while 38.6 million tuned in to see last season’s American Idol winner crowned.

Why has live TV remained so powerful? Part of it, obviously, is community. People still like to be a part of major world events and discuss them while they’re fresh—not a week later, when everyone knows which handsome bachelor “The Bachelorette” picked, or who won the big game. But there’s a new twist to that today: Thanks to the rise of social media and the Internet, people can discuss live TV while it’s happening. It’s even given rise to a new term, “social TV.” A recent study by Ovum, a business/technology research firm in the U.K., found that almost 40% of TV viewers discuss particular TV shows via social media while they’re watching them. This is evidenced by the average one million tweets generated during each of the seven games of this year’s World Series and 4.5 million from this year’s Superbowl viewers. Some shows, like “The Voice”, a live singing contest, even show viewer tweets on air.

More broadly, 51% of consumers surveyed said they used the Internet to access news or information while watching TV—the “second screen” phenomenon. The upshot: Rather than being a replacement for TV, many Internet technologies are proving complimentary; the online environment is the new water cooler where people gossip with each other about TV shows and other topics. Indeed, the new stereotype of a couch potato is fast becoming someone splayed out on his or her couch, snacks in hand, pecking away periodically at a laptop or tablet to trade comments with friends.

Equally important, the nature of TV content has changed profoundly over the last several years to favor live viewing. Today, reality, talk and contest-type programs, a la “American Idol,” “The Biggest Loser” and “Dancing with the Stars,” dominate the airwaves. Old-fashioned comedies and dramas no longer sit at the top. (In the 2010-11 season, the top-rated, prime-time network shows were, in order, two “American Idol” episodes, “Dancing with the Stars”, “Sunday Night NFL Football” and, then, finally, “NCIS.”) And to fully participate in some of these programs, like Idol, one must watch them live. Otherwise, you can’t vote for the winner. And people like to vote—over 100 million votes were cast in this year’s Idol season finale. And even for traditional broadcast shows, social media presents the opportunity for “spoilers” from your network, so you better watch your show live to avoid missing out on the surprise ending in the season finale of your favorite drama.

That said, it doesn’t mean people are going to be watching all their TV on an actual TV set in the coming years. Cable and satellite companies are all working feverishly to catch up to new, Internet content-providers like Hulu, YouTube, Netflix, AppleTV, Roku and, of course, Amazon.com (Nasdaq: AMZN). The traditional players, like Comcast (Nasdaq: CMCSA) and Time Warner Cable (NYSE: TWC), are testing new technologies to allow them to deliver shows and movies via Internet protocol, which means they can be beamed via broadband connections to multiple devices—PCs, smartphones, tablets, whatever. It’s a concept known in the industry as “TV Everywhere”, and it’s the natural evolution of online video. It’s also a natural evolution of IP: The Internet has gradually chewed through countless traditional industries, from data to voice to music, and TV is one of the last analog bastions.

There are some obstacles to the IP-video revolution, including securing rights for specific content and figuring out how to measure viewership when people are watching shows on multiple devices. But the cable and satellite providers have a big incentive to figure it out—namely, keeping their subscribers. Today’s on-the-go consumers, who expect to complete most computing tasks on a mobile phone or an iPad, are also demanding the kind of high-quality video they get on their living room TVs when they’re out of the house. And right now, the video experience on computers, smartphones and other mobile devices—especially for live content—can still be lacking. Current pay TV providers are in the best position to be a one-stop source for high-quality video, anywhere and everywhere. Many start-up companies, including ours, are working to provide them with cutting-edge technologies to make that happen—keeping TV alive (with a little help from Simon Cowell).

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