Netflix CEO Reed Hastings  (Source: Netflix)
Netflix pays the price for its Q3 mishaps

Earlier today, we reported that Netflix would be extending its services to the UK and Ireland. This afternoon, however, Netflix's earnings report shed some light on all the turmoil that has surround the company in the past few months.
Netflix announced that it lost 810,000 customers during Q3, compared to net subscriber additions of 3.3 million and 1.8 million for Q1 2011 and Q2 2011 respectively. This should come as no surprise considering that the company has made a few shaky moves like raising prices on customers and announcing its Qwikster DVD spinoff only to backpedal shortly after.

Netflix also announced that it is reducing guidance revenue and profit for Q4 due to the loss in subscribers. The company contends, however, that it will still remain profitable.

In a letter to shareholders, Netflix expressed its disappointment in how things have panned out this past quarter:

While we dramatically improved our $7.99 unlimited streaming service by embracing new platforms, simplifying our user-interface, and more than doubling domestic spending on streaming content over 2010, we greatly upset many domestic Netflix members with our significant DVD-related pricing changes, and to a lesser degree, with the proposed-and-now-cancelled rebranding of our DVD service. In doing so, we’ve hurt our hard-earned reputation, and stalled our domestic growth. But our long-term streaming opportunity is as compelling as ever and we are moving forward as quickly as we can to repair our reputation and return to growth.
Despite the bad news above, Netflix reported Q3 revenue of $822 million and earnings per share of $1.16. Those were well above analyst estimates of $811 million and $0.94/share respectively.
However, those numbers weren't enough to stop shares of Netflix from sliding nearly 27 percent in after hours trading.

Source: Netflix Letter to Shareholders

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