Netflix Shares drop After Hours

Going down - BSN

(Best Syndication News) - Netflix (NASDAQ:NFLX) shares dropped 16.53 percent to $85.10 (-$16.83) during afterhours trading. The drop occurred after the company released their Q1 earnings report earlier today. By the end of Monday's session, the shares were trading at $101.84, down $4.27 (-4.02%).

The earnings report showed that Netflix had global revenue of $870 million in Q1 2012. This was down $6 million from the Q4 2011. The earnings per share for Q1 2012 was $0.08 per share, which is much lower than the peak of $1.26 per share in Q2 2011. Year-on-year revenue has improved 21 percent. There was a net income loss of $5.0 million, which was much better than Netflix expected.

Netflix divided their DVD by mail rental and online streaming into separate rental fees. There was an attempt to divide the services to separate websites, but that was halted after customers were not happy with the price increases.

DVD rentals by mail declined to 10.09 million in Q1 2012. This has been a trend. The DVD by mail rentals were 13.81 million in Q3 2011, and by Q4 2011 it dropped to 11.17 million. Netflix believes that DVD rentals by mail will continue to decline, but at a slower pace than in recent quarters.

Conversely, streaming video rental subscriptions have been on an upward trend. Domestically, there was 22.02 million in Q1 2012 compared to 20.15 in Q4 2011. Netflix said that both domestic and international streaming services helped to contribute to the profit of the company.

Netflix has been expanding internationally. Currently Netflix is anticipating 3.45 million to 4.0 million international subscribers in the next quarter with around 2.8 to 3.25 million paid subscribers.

In Q2 2012 Netflix is forecasting a Net Income loss of between $6 and $8 million.

By: Dave Reddy

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