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Investors Snap Up Shares of Netflix in Initial Nasdaq Trading

NEW YORK -- It's amazing what dropping the "dot-com" from your name can do for an initial public offering.

Netflix Inc. , an online entertainment company that, when known as NetFlix.com had to once cancel its IPO, opened higher initial trading Thursday.

Shares of the Los Gatos, Calif. , company opened on the Nasdaq Stock Market at $16.19, 7.9% above the $15 price set on its IPO of 5.5 million shares. Near midday, the shares traded even higher at $16.95.

The offering, led by Merrill Lynch & Co . Inc. (MER), priced at the high end of price talk of $13 to $15 a share, an unusually aggressive pricing in what has been a tough market for unprofitable technology IPO hopefuls.

"To price at the top of the range, we were very fortunate," said Reed Hastings, the company's chief executive, in an interview.

Netflix is the country's best-known online entertainment subscription site, allowing users to rent three DVDs a month for a monthly subscription charge of $ 19.95.

One of Netflix's biggest advantages is its subscription model, said George Nichols, an analyst with Morningstar.com in Chicago .

"These ongoing billing relationships, rather than one-time purchases, have annuity-like characteristics that provide a steady revenue stream," he said.

It also has some growth trends in its favor, Mr. Nichols said. "As far as consumer technologies go, DVD is still relatively young, and many new DVD players are being sold as the mass market fully adopts it."

The business isn't yet profitable, though the company has been narrowing its losses. In the first quarter, Netflix logged $30.5 million in revenue, for a $ 4.5 million net loss. In the comparable period in 2001, it lost $20.6 million on $17.1 million in revenue.

For Netflix, the offering marked a success after failing to come to market two years ago. Netflix originally filed to raise $86.3 million through Deutsche Bank in April 2000 , but the offering was withdrawn three months later as the IPO market began its long, dry period, one that still exists.

The offering was revived in March of this year, but with new terms. The company filed to sell as much as $115 million through Merrill Lynch, though, in the end, the offering raised $82.5 million.

Netflix's Mr. Hastings said he believes that the proceeds now will "give pause to our competitors" and allow the company to more aggressively market its services free to potential customers. Nine of 10 people who receive Netflix free initially end up subscribing, he said.

The challenge to the business is twofold, Mr. Hastings said. Blockbuster Inc. (BBI) recently said it would get into the mail-rental business, putting it into direct competition with Netflix.

The other, Mr. Hastings said, was getting people to feel comfortable renting DVDs online and receiving them through the mail, a process that "just sounds odd to people until they try it," he said.

Netflix featured one of the odder risks to its business in the offering documents filed with the Securities and Exchange Commission: the U.S. Postal Service. If the Postal Service does indeed raise rates this summer, it "will adversely affect our gross profit if we elect not to raise our subscription rates to offset the decrease."

Customer satisfaction might also take a hit if the Post Office stops Saturday delivery and customers can't get their DVDs in a timely fashion, Netflix said.
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1112All-time high for NFLX, 629.35. Close 629.00Sr K-3 hours ago
1111Netflix has added language choices. I've seen audio choices and at least 10 Sr K-Sunday
1110Netflix is thinking about getting rid of star ratings Netflix is thinking aboutTimF-Sunday
1109Netflix gets a facelift. What's changing? Netflix announced on Wednesday thaTimF-Sunday
1108I thought Netflix was a really small market for lazy people to watch tv but analJDmln-May 18
1107Netflix in Talks to Enter China With Jack Ma-Backed Wasu finance.yahoo.com NetfJakeStraw2May 15
1106"Linear TV is like the fax machine" - Netflix CEO Pulls No Punches WitJakeStraw2May 12
1105All-time highs, latest 589.66 Sr K-May 11
1104Netflix Can Now Ban Customers Who Use VPNs Netflix has updated its terms and TimF1May 4
1103Thanks for clearing that up, my mistake!SecretCaps-April 17
1102Netflix Gets Star Treatment From Broadband Firms Abroad Unlike in U.S., ProvideSr K1April 16
1101If you mean "stream", 4k is $11.99 per month, a premium of $4.00 compaSr K-April 16
1100Can they even provide the steam that is discernable between 1080P and 4k?SecretCaps-April 16
1099Now up $86!SecretCaps-April 16
1098Netflix Hits All-Time High on Huge Subscriber Growth: What Wall Street's SayJakeStraw-April 16
1097NFLX on steroids prior to earnings announcement (4/15), usually a good sign. YouThe Ox-April 15
1096+$58 in AH trading!J.B.C.-April 15
1095Midnight Trader, comments on preliminary proxy statement: 03:15 PM EDT, 04/13/2Sr K-April 13
1094Follow-up; It might be a case where earnings announcement actually generates a J.B.C.-April 13
1093NFLX on steroids prior to earnings announcement (4/15), usually a good sign.J.B.C.-April 13
1092Netflix, Inc. was upgraded by analysts at Citigroup Inc. from a "neutral&quJakeStraw1April 10
1091youtu.beJakeStraw1April 9
1090Netflix, Amazon and Hulu No Longer Find Themselves Upstarts in Online Streaming Glenn Petersen-March 25
1089Screw the theaters.Jurgis Bekepuris-March 5
1088Theaters dig in heels, refuse to show Netflix’s Beasts of No Nation Cinema chaTimF2March 5
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