Netflix
Netflix ended the period with 10.3 million subscribers, the Los Gatos, California-based company said yesterday in a statement. Some shareholders expected more, analysts said.
“Investors are nitpicking,” Michael Olson, an analyst for Piper Jaffray Cos. in Minneapolis, said in an interview. “The stock has had a big run so every metric needed to be perfect. In our eyes every metric was perfect.” He recommends investors buy the shares and doesnt own them.
Netflix reported Feb. 12 it had added 600,000 customers this year, indicating with yesterdays announcement that it signed up 300,000 between then and March 31. The additions are in line with previous first-quarter trends, Chief Executive Officer Reed Hastings said on a conference call.
“We had record subscriber growth and record earnings,” Hastings said in an interview. “Within this economic climate we feel very thankful that weve been so successful.”
Netflix fell $3.03, or 6.7 percent, to $42.29 after hours yesterday following the results. The stock declined 56 cents to $45.32 in regular Nasdaq Stock Market trading and had gained 52 percent this year before the announcement.
Investors may have anticipated as many as 10.5 million new customers, Nathaniel Schindler, a Bank of America analyst, wrote in an April 21 note.
Company Forecast
Netflix raised its 2009 projections for new subscribers, revenue and profit from forecasts made in January. Subscribers will reach 11.2 million to 11.8 million by year-end, while sales and net income will be as much as $1.67 billion and $106 million, the company said.
The company previously forecast as many as 11.3 million subscribers, with as much as $1.64 billion in revenue and up to $98 million in profit.
Netflix projected second-quarter revenue of $403 million to $409 million, and profit of $27 million to $32 million, or 44 cents to 53 cents a share. Subscribers will grow to 10.4 million to 10.6 million, the company said.
Analysts estimated second-quarter profit of 47 cents a share, the average of 17 estimates compiled by Bloomberg, and sales of $406.7 million, the average of 15.
The cost to bring in a subscriber fell to $25.79 in the first quarter from $29.48 a year earlier, Netflix said. That is the lowest since the company first sold shares to the public in 2002, based on comments Hastings made in January.
Netflix expects to keep that cost at less than $28 this year, Chief Financial Officer Barry McCarthy said on the conference call.