Netflix Subscribers Drop 800,000 in 3rd Qtr, More Expected
Either Netflix is IN the shrink wrap business or some CEO heads are wrapped in shrink wrap. It’s hard to imagine how this company has gone from one of the most loved businesses in the US to one of the most laughed at businesses. Plunging a massive 27% makes you wonder who’s in control. Hastings has already done a few ‘Haste’ maneuvers that got their very own spotlight on SNL–what’s next?
By the end of the ongoing quarter, which wraps up Dec. 31, Netflix expects those numbers to drop further. It forecast that it will have 20 million to 21.5 million streaming customers and up to 11.3 million DVD subscribers in the U.S.
Netflix shares plunged 27% in after-hours trading, though the company reported earnings that beat analysts’ expectations. Netflix earned $62 million, or $1.16 a share, on a record $822 million in revenue.
Unprofitable quarters ahead: The company also warned shareholders that it will be unprofitable in coming quarters.
Netflix said earlier on Monday that it will expand its streaming video service into the United Kingdom and Ireland. In its earnings letter later in the day, Netflix said that expansion will make the company’s overall business unprofitable “for a few quarters” starting at the beginning of 2012.
Netflix said it will hit pause on its international expansion after its U.K. and Ireland launches “until we return to global profitability.”
Netflix ended the quarter with $366 million in cash on hand, down from $376 million at the end of its previous quarter.
A nightmarish third quarter: Netflix’s (NFLX) quarter started off badly in July, when the company angered many subscribers by saying it would begin charging separate prices for its DVDs-by-mail and streaming video plans. That amounted to a big price hike for Netflix customers, as the cheapest-possible bill for customers who want both services jumped from $10 to $16 a month.