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Analysts predict a disappointing second-quarter due to the additional spending Netflix has had to do in order to increase and maintain a broad archive of content for consumers

Netflix has released its Q1 results as well as the predicted outlook of the current quarter, which disappointed investors.

Netflix, an on-demand video streaming and video rental-by-mail company that launched its subscription service in 1999, has grown by leaps and bounds over the years. Netflix has put fear into Hollywood executives who believe the company is growing too large too fast, and has pushed Blockbuster into bankruptcy. It may even acquire original programming

Now, Netflix has released its first-quarter results, which showed an increase in revenue and higher gross margins. Profit skyrocketed from $32.3 million (59 cents a share) last year to $60.2 million ($1.11 a share) in the quarter ended March 31 of this year. Also, revenue increased 46 percent to $718.6 million, and the number of U.S. subscribers increased 63 percent from one year ago to 22.8 million today. Netflix has 23.6 million subscribers worldwide, which is a 69 percent increase from last year. 

In addition, gross margin widened from 37.8 percent to 39 percent.

Despite excellent Q1 results, analysts predict a disappointing second-quarter due to the additional spending Netflix has had to do in order to increase and maintain a broad archive of content for consumers. 

Netflix partially blamed the predicted Q2 results on the licenses it needs to stream movies over the web. 

"No one knows what to make of it," said Michael Pachter, a Wedbush analyst. "For the first time, they're talking about the streaming content costs growing dramatically, and now it's reflected in their guidance for the quarter." 

Pachter hopes Netflix will be "more transparent about its streaming costs."

Netflix shares fell 5.3 percent to $238.38 after the video streaming and rental giant announced that it expected per share to be between 93 cents and $1.15 in its second quarter. 

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By callmeroy on 4/27/2011 8:40:43 AM , Rating: 2
Yep. I'm a Netflix subscriber -- I have the service on my blu-ray player. I used it alot two weekends ago all day was just netflix movies.

But there are three main things that I don't like with Netflix:

1. I don't care what anyone says even their HD movies do NOT deliver proper or "true" surround sound. Any time I've ever streamed a movie marked as "HD" from Netflix I notice the surround sound isn't there like if I watch a blu-ray, HD on one of my HD channels or even if I stream something from Vudu (those reasons also tell me its not my setup or equipment either).

2. This ties into #1 a bit -- just the lack of HD content. If I'd have to make up what % of their content is in HD I'd have to say its at *BEST* worse its about 20-25%. That's very disappointing as its 2011, a time when HD tvs is more the norm than the exception for most people, fast broadband internet and blu-rays are also the "norm" in most having a streaming service NOT be dominant with HD content is a bit ridiculous.

3. QUALITY new content. Sure every week I see something new in my Netflix menu but most of it are movies that stink or are no-name actors. How about some "REAL" movies that when they were out they were highly rated in the theatres. I'd love to see some actual "new movies" (as in releases no MORE than 4 years old) but I now that's super costly for them.

So with my griping why do I keep subscribing? Well they do have content I enjoy -- I like stand up and I have a few standup specials saved in my "instant queue"....they also have a dozen or so movies I like very much they are also saved forever in my "instant queue"....for just about $10 a month (with taxes)....its cheap and perfect to have something to watch on "blah days" at your finger tips.

"A lot of people pay zero for the cellphone ... That's what it's worth." -- Apple Chief Operating Officer Timothy Cook
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