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Tuesday, October 23, 2007
Netflix delivers on movies .... and Q3 earnings expectations
Netflix, Inc.Like many people, I was surprised by the good Q3 earnings of Netflix that came out after the market close yesterday. Netflix's revenue for the period increased 15% from last year, and its shares were up over 10% at one point in the after-hours trading. The good earnings followed the bad earnings in its second quarter where its lost subscribers due to its competition with Blockbuster. The competition is still very much on but thanks to its lowered prices and lower marketing cost, Netflix was able to add new subscribers during the Q3. Blockbuster has the advantage of allowing customers to both rent movies in store or over mail. However, it will be interesting to see whether Netflix is able to counter Blockbuster's advantage of in-store pickups/returns with its latest offering by downloading movies over the internet. Hopefully, such downloads would also reduce its delivery costs.

While I am not a Netflix shareholder nor am interested in becoming one, from customers' perspective, I like Netflix. When it first introduced its business model of renting movies over the mail, I liked the idea but had doubts if the company could survive long term with that kind of business model considering the high costs of shipping, charging no late fees even when renting out movies for many days, etc. However, as a student of business and life, I am happy when businesses and people in all walks of life find ways to beat the odds and come up with innovative ways to increase sales or reduce costs.

For people like us, Netflix is a good service since we don't have to run to the stores to pick up or return movies. And due to small kids, since we don't watch movies in one go and rather watch it in installments over a period of many days, not having to pay any late fees is real saver. Hopefully, the firm will continue to keep its subscription prices reasonable as well as continue to meet its customer expectations.

For related article, see: Netflix Wins With Price Cuts

Netflix DVD Rentals. Only $4.99 a month. NO LATE FEES; Free Shipping. Try for FREE!

Disclaimer: I am not a financial analyst nor am recommending the purchase/sale of Netflix or Blockbuster stocks or any other security for that matter. These stocks were listed in my post just for information and entertainment purposes.
posted by Ruby @ 12:40 AM  
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