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Note to Netflix: There’s a recession on

January 27, 2009

NETFLIX/¬†Netflix Inc <NFLX.O> apparently didn’t get the memo: there’s a recession on.

The online DVD rental company is aiming for “at least” 12 percent net earnings growth in 2009 and will invest any “surplus profit” — terms not heard much on Wall Street these days — in growing its subscriber base and streaming content, Chief Executive Reed Hastings told investors on Monday.

The comments, made amid a storm of bad news from other U.S. media companies, came as the Los Gatos, California company posted a 45 percent rise in quarterly profit that even its own executives weren’t expecting.

“Our October forecast of slowing growth turned out to be wrong,” Netflix CFO Barry McCarthy admitted on a conference call with analysts. “We continue to see strong momentum in our business, quarter to date.”

And then there was this: McCarthy said so many Netflix users are streaming content to their PCs and set-top boxes that they aren’t ordering as many DVDs online. This equals fewer costs and more profits if this streaming thing takes off.

The relentlessly cheerful news continued: Netflix is still hiring! It is testing weekend shipping in some markets to speed service! It is within 0.4 percent of the 10 percent improvement it sought in its movie recommendation algorhythm!

On and on: More subscribers are upgrading to more costly plans than are cutting to cheaper plans! MEDIA NETFLIX HASTINGSFree cash flow and gross subscriber additions hit a new record! “We will reach 10 million subscribers this quarter!” Hastings said.

The company says no data supports the idea that its growth is due to “cocooning” consumers who are trading expensive trips to the movies for DVDs — so rivals can’t even feel the satisfying schadenfraude of knowing that Netflix is profiting from misery.

What’s with this company? Don’t they know there’s a recession on?

Comments

see how much money can be made by holding up your customers dvd: watch there will be a raise in prices soon, thank you netflicks

Posted by don miller | Report as abusive
 

Netflix has hit a game changing nitch and they continue to execute well. There have been multiple times over the past 2-3 years that nay-sayers have said their growth story was extended and they keep kicking tail. They still act like a private company and they are one of the few success stories outside of healthcare. Kudos to Motley Fool for calling their upside two plus years ago. Brian Marchant-Calsyn

 

I have Netflix and I love the service.Actually… we canceled our premium cable channels because of Netflix. It’s essentially the same thing, better selection, and a cheaper cost than subscribing to HBO or Showtime.

 

Bloomberg is saying that Hollywood may have to write down movie revenue due to lost income on DVD sales due to Netflix. What a game changer.Brian Marchant-Calsyn

 

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