Technology StocksNetflix (NFLX)

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To: 2MAR$ who wrote (651)11/4/2011 10:13:45 AM
From: J.F. Sebastian
   of 1658
Hard to know if the next stop for Neflix is $50 or $150. After the screwups they've made this year, I don't trust their management at all. They're another bad announcement away from sliding below $50 as I see it, yet if they quit shooting themselves in the foot, I can easily see NFLX climbing well over $100 again.

Thoughts anyone?

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To: J.F. Sebastian who wrote (652)11/4/2011 2:09:30 PM
From: 2MAR$
   of 1658
Last night's a/h @ $92 sold off well but came bouncing right back in off $87's to $92 ....its just a trading vehicle now with the Futs & general market ....traders at play <g

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From: ChrisGillette11/17/2011 5:52:03 PM
   of 1658
Have been watching NFLX, curious why it's been beaten up the past few days, then came across the article below.

Any thoughts/opinions on NFLX going forward?

2.9 Million Reasons for Netflix to Worry
By Rick Aristotle Munarriz
November 16, 2011

You rarely find breaking news at the bottom of a press release, but there's something peculiar about Netflix's (Nasdaq: NFLX ) press release this morning detailing a new overseas content licensing deal.

See, Netflix press releases now refer to the company as serving "more than 20 million streaming members in the United States, Canada, and Latin America." Less than a month ago, it was still referring to itself as serving "more than 25 million members" in those regions.

Netflix hasn't shed 5 million subscribers since the end of its third quarter. Well, at least we can hope that's the case. The key difference between the two corporate descriptions issued just three weeks apart is that Netflix is only referring to "streaming" customers now.


Netflix still had 22.93 million streaming subscribers at the end of the third quarter. Why is it simply drawing the line at "more than 20 million" on that front? Where have the 2.9 million extra subscribers gone?

Even Netflix doesn't know when the migration madness will end

It's easy to see why Netflix is playing it safe. The last thing it wants to do is brag about, say, "more than 22 million streaming members" in today's press release, only to whittle it down to 21.5 million when it inks another content deal next week.

The rub here is that Netflix did issue pretty specific guidance for how this quarter will play itself out on the streaming front.


Netflix's guidance last month calls for streaming subscribers to clock in between 21.6 million and 23.5 million by the end of this quarter.

The obvious answer is that it's simply leaning on a round "more than 20 million" sum to cover everything up to the 25 million milestone, but it's not as if the company has shied away from more specific descriptions before.

"More than 23 million members," reads a few of its springtime press releases.

I may be making mountains out of molehills, but remember this if Netflix somehow falls short of its late October guidance. Even Netflix tried to warn you.

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To: J.F. Sebastian who wrote (652)11/20/2011 9:50:56 PM
From: ChrisGillette
1 Recommendation   of 1658
<<Hard to know if the next stop for Neflix is $50 or $150. After the screwups they've made this year, I don't trust their management at all. They're another bad announcement away from sliding below $50 as I see it, yet if they quit shooting themselves in the foot, I can easily see NFLX climbing well over $100 again.

Thoughts anyone?>>

I view the recent sell-off as an opportunity, since I think that NFLX's fundamental business remains intact.

2011 is shaping up to be the year of the tablet. 40 million iPads will be sold in 2011. 4 million Kindle Fires will be sold in just the last 8 weeks of 2011. And thanks to the Fire's $199 price point, the remaining tablet makers are slashing prices to compete. These lower prices will drastically expand the tablet market.

So what will people do with their tablets? By and large, they'll consume media. Both Apple and Amazon have promoted the Netflix app, and tablet sales should substantially increase the demand for Netflix's streaming content.

According to a recent article in TechCrunch, people watch videos 30% longer on tablets than on desktops.

And according to a recent report by Sandvine, Netflix accounts for 32% of internet traffic during prime time hours. This is up from 20% just a few months ago.

These are very strong secular trends, and I don't see anything on the horizon that will slow the momentum in Netflix's business.

Even if Amazon gets serious about streaming as part of its Prime service, it would be better off acquiring Netflix than starting from scratch on its own. Netflix has many advantages: Amazing user interface and recommendation engine, device ubiquity including popular devices like Xbox, first-mover in numerous international markets, etc.

Not sure where NFLX will trade in the short-run, but I think it will return to $200 over the next 2-3 years.

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From: Glenn Petersen11/21/2011 6:36:00 PM
1 Recommendation   of 1658
Another hit:

Netflix Selling $200 Million in Convertible Bonds to VC Firm

By Shira Ovide
Wall Street Journal
November 21, 2011, 5:12 PM ET

Netflix said it is selling about $200 million in convertible bonds to Technology Crossover Ventures, a venture-capital firm that has made late-stage investments in big tech companies including Groupon.

Investors are not taking it as a good sign that Netflix needs a $200 million infusion of cash, and issuing fresh stock in the process. Netflix’s share price, which fell Monday during an ugly trading session, were slipping about 8% in after-hours trading but have clawed back some of those losses.

In a recent stock-research note, J.P. Morgan said it believed Netflix may need additional capital. The company ended the September quarter with $366 million in cash and short-term investments, and with $200 million in long-term debt. Netflix has been spending money to acquire digital-video rights for TV shows and movies.

Meanwhile, Netflix has been spending money buying back its own stock, including $199.7 million worth of buybacks in the first nine months of 2011, at an average price of $222 a share. Netflix’s stock price is about one-third of that level now.

The venture-capital firm, TCV, won’t earn any interest from its Netflix bonds, according to the regulatory filing. The VC firm will have the right to appoint a nominee to the Netflix board. (For now, TCV designated an existing Netflix director, Jay Hoag, as its board nominee.)

According to a regulatory filing, the initial conversion price baked into the deal is $85.80 for each Netflix share. The company’s stock price closed Monday at $74.47. The Netflix private placement is contingent on the company selling at least $200 million in common stock to “non-affiliated third parties,” according to a regulatory filing.

In a separate SEC filing, Netflix registered a so-far-undisclosed slug of stock for sale. Morgan Stanley and J.P. Morgan are leading the stock offering, according to the filing. Netflix said it will use proceeds from the stock sales for “general corporate purposes, including working capital and capital expenditures.”

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From: 2MAR$11/22/2011 1:59:28 AM
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Many had been looking for a reset to lows around $74 in this latest market correction to trade back in (cover) there really much chance of it getting up over $100 and got ahead of itselfmid 90s, the news of the convertibles tankd it to just under $70 but a playable bounce back up to near $74 a/h ....still another added weight good chance of a bounce tomorrow , we'll see .

$74 was the reset to low pivot which so many stocks have been returning to like BAC here low $5's

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To: ChrisGillette who wrote (655)11/22/2011 12:31:21 PM
From: i-node
   of 1658
>>> Not sure where NFLX will trade in the short-run, but I think it will return to $200 over the next 2-3 years.

You're dreaming.

Management has over-spent on content based on an assumption that growth would continue, and it didn't continue. They blew the critical decision of ramping up content cost vs. anticipating growth. We'll see a stream of bad news for next couple of years.

They had a really good chance, but companies make this blunder all the time. We saw Sirius make the same mistake with Howard Stern (and XM was ultimately drawn into it under the guise of "competing").

It could take years for NFLX to recover and by that time, the opportunity will have passed -- streaming will be the business, everyone will be in it, and whatever technology advantage NFLX had will have been caught and maybe surpassed by others.

These heavy fixed cost burdens of content costs will require more dilution and more debt and the stockholders will obviously be the losers. I was lucky enough (sheer luck, I might add) to bail at the top and I love the company, but its time has passed unless something really, really radical happens (not quite sure what that would be).

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To: i-node who wrote (658)11/22/2011 2:50:39 PM
From: ChrisGillette
   of 1658
<<Management has over-spent on content based on an assumption that growth would continue, and it didn't continue>>

Can you elaborate? Do you view this as a long-term growth issue, or as a short-term bad PR / backlash issue? I view it as the latter.

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From: Glenn Petersen11/22/2011 7:37:39 PM
   of 1658
NETFLIX: Oh, And By The Way, We're Going To Lose Money Next Year

Henry Blodget
Business Insider
Nov. 22, 2011, 4:46 AM

Five months ago, Netflix was a $300 stock.

Now it's a ~$75 stock.

It's raising $400 million at its new, clobbered stock price to fund all its new content investments.

And... it's going to lose money next year!

Yes, that's the latest news that Netflix tucked into the prospectus for the stock portion of its stock and convertible bond offerings:

We expect that consolidated quarterly revenue will be relatively flat until we can achieve positive net subscriber additions. As a result of the relatively flat consolidated revenues and previously announced increased investment in our International segment, we expect to incur consolidated net losses for the year ending December 31, 2012.

Previously, Netflix said it might lose money for the first few quarters of 2012. So this is a change.

For comparison, Netflix is projected to earn about $4.10 per share this year.

Will Netflix ever recover, or is it toast?

I'm optimistic, though this latest fund-raising and loss news is certainly an unwelcome surprise.

On a positive note, Netflix also says its subscriber cancellations in its hybrid streaming-and-DVD business are slowing, and gross additions for its streaming-only service are still strong...

Consistent with our Q4 guidance, our domestic streaming and DVD gross cancellations continued to steadily decline in October and the first half of November, while gross additions of new streaming subscribers remained strong. As a result, consistent with our prior guidance, we continue to expect our domestic streaming net additions to be about flat for November as a whole and strongly positive for December.

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From: 2MAR$11/23/2011 8:41:56 PM
   of 1658
Disney-YouTube Strike Deal for Movie Rentals keeps getting better

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