backtop


Print 12 comment(s) - last by TakinYourPoint.. on Jan 25 at 6:00 PM

Netflix surprises Wall Street

Streaming video company Netflix recently posted its financial results for Q4 2012. Netflix had a very strong quarter adding nearly four million new customers in the United States and abroad. The company's results were better than expected on Wall Street, sending stock prices soaring (the stock is currently up over 37 percent to $142).

One reason analysts and Wall Street investors were so surprised by Netflix's quarterly results was because three months ago the company had issued a letter to shareholders warning that it expected to see a loss for the fourth quarter.

Reuters believes that Netflix underestimated the impact that incredibly robust sales of tablets, smartphones, and smart TVs would have over the holiday shopping season. The huge numbers of new devices meant a significant number of new signups for the streaming video service.

Netflix reported $8 million in net income for Q4 2012 or $.13 per share. Revenue rose 8% to a total of $945 million compared to the same quarter of the previous year.

The company also says that it expects to add 1.7 million new members during the first quarter of 2013. However, Netflix is predicting "relatively flat" net income for the quarter due to declining DVD profits and increased operating costs globally.
 
Analysts on Wall Street had expected Netflix report quarterly loss of $.13 per share. Full-year income for Netflix in 2012 was $17 million, a 92% decline from the previous year when Netflix reported $3.6 billion in full-year income. The massive decline is blamed on increasing costs (mainly the costs of purchasing movie/TV show streaming rights from studios).

Netflix recently announced its new AirPlay rival, DIALservice, in cooperation with YouTube.

Sources: Reuters, Netflix [PDF]



Comments     Threshold


This article is over a month old, voting and posting comments is disabled

RE: Fees
By TakinYourPoints on 1/25/2013 5:55:24 PM , Rating: 4
quote:
In any case a 2% margin for Netflix is more realistic that the stupendous profits it might otherwise have. Well, barring Apple and it's mandatory 30% cut of absolutely EVERYTHING.


That only applies to the app store. Everybody, Apple included, pays about the same wholesale prices for media purchases and rentals, be it books, movies, music, etc. iTunes makes less than 10% total. Margins are even lower for "you get everything" subscription services like Netflix, Rdio, Spotify, etc, since profits to publishers are distributed differently. Direct sales or rentals from Apple/Microsoft/Amazon/etc are going to get a relatively bigger (but still low) cut.

30% is a pretty standard cut for applications stores, its the same with Amazon and Microsoft. The exception is something like Steam which uses a sliding scale. Valve's cut starts at 30% but can go as high as 70%.


"Folks that want porn can buy an Android phone." -- Steve Jobs

Related Articles













botimage
Copyright 2014 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki