Thursday, February 26th2.2°C
25154
24506

Good fix for Netflix

Netflix has re-emerged as a stock-market star after a fourth-quarter performance that demonstrated its success in broadening the appeal of its Internet video service despite stiffer competition.

The results announced Wednesday served as a resounding endorsement of Netflix Inc. CEO Reed Hastings, who has been spending heavily to license more compelling movies and TV shows in hopes of warding off intensifying competitive threats. Companies such as Amazon.com Inc. and Coinstar Inc.'s Redbox have expanded into streaming video to Internet-connected devices to compete with Netflix.

Hastings' strategy has been met with widespread skepticism, but it paid off during the final three months of last year.

Netflix gained 2 million video-streaming subscribers in the U.S. during the quarter, propelling the company to a profit during a period that was supposed to produce a loss. In a letter to investors, Hastings credited the gains to people's interest in watching a wide range of entertainment on the tablet computers and Internet-connected TVs that they got as holiday gifts.

"As the sales of tablets go, apparently so go the fortunes of Netflix," Wedbush Securities analyst Michael Pachter said.

Investors were euphoric. Netflix's volatile stock soared $36.24, or more than 35 per cent, to $139.50 in extended trading after the numbers came out. If the rally carries over into Thursday's regular trading, Netflix's stock would hit a new 52-week high. It would also mark a nearly 80 per cent increase since the company's early December announcement of a licensing deal with The Walt Disney Co. for exclusive streaming rights to new movies beginning in 2016.

The upturn in Netflix's stock has been a boon for billionaire investor Carl Icahn, who began accumulating a 10 per cent stake in the company in early September when the stock was trading below $55.

Despite the recent rebound, Netflix's stock remains well below its peak price of nearly $305 reached in July 2011. That was around the same time the company outraged subscribers with a change that increased prices by as much as 60 per cent for those who wanted to stream video and still rent DVDs through the mail. Hastings has been scrambling to make amends since the backlash triggered mass cancellations.

"There is still an echo and a bruise," Hastings told analyst during a Wednesday conference call. "We are still extremely thoughtful and careful about what we are trying to do. It wouldn't take much for the issue to flare up again or for us to lose trust. You might say we are on probation at this point, so we are out of jail."

The fourth-quarter surge in new customers left Netflix with 27.1 million U.S. subscribers to its streaming service, which costs $8 per month.

The Canadian Press
How does this story make you feel? (69 total votes)
Castanet MoodMeter
Amused
5.8%
Annoyed
4.3%
Happy
79.7%
Sad
2.9%
Disappointed
2.9%
Relieved
4.3%


Read more Business News




Recent Trending




Today's Market
S&P TSX15241.16+12.59
S&P CDNX700.93+1.44
DJIA18214.42-10.15
Nasdaq4987.89+20.753
S&P 5002110.74-3.12
CDN Dollar0.8009+0.0018
Gold1203.00+6.10
Oil51.08+0.69
Lumber296.80+1.30
Natural Gas2.895-0.007

 
Okanagan Companies
Pacific Safety0.115-0.005
Knighthawk0.010.00
QHR Technologies Inc1.58+0.02
Cantex0.035-0.005
Anavex Life Sciences0.19+0.001
Metalex Ventures0.04+0.005
Russel Metals25.68+0.37
Copper Mountain Mining1.26+0.03
Colorado Resources0.15+0.015
ReliaBrand Inc0.0087+0.0017
Sunrise Resources Ltd0.05+0.015
Mission Ready Services0.21-0.015

 



23015

FEATURED Property
21933942370 Tallus Ridge Drive
10093033 bedrooms
$819,000
more details
image2image2image2
Click here to feature your property
Please wait... loading


Creating your retirement vision

A vision means different things to different people. To the head of a large corporation, it’s the ability to chart a course that will deliver success (think Steve Jobs and Apple), to a shaman, i...


It's OK to say 'I'm sorry'

Photo: ContributedStand-up comedians and sitcoms have been making fun of Canadians for being polite as long as I can remember. Being known for our niceness is certainly not a bad thing and I wish more...


Are you asking the right questions?

Have you ever had this happen to you? You are in the middle of your second or third good discussion with a prospect and everything seems to be going great. The prospect seems engaged and happy to work...

_








Member of BC Press Council


24850