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Netflix (NFLX)
An SI Board Since May 2002
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Emcee:  Glenn Petersen Type:  Unmoderated
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 Netflix originally filed to raise $86.3 million through Deutsche Bank in April 2000 , but the offering was withdrawn three months later as the IPO market began its long, dry period, one that still exists.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

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1514Looking good! $150+ soon?Intelim-Wednesday
1513All-time high, and breakout. 147.52 147.70Sr K-Tuesday
1512all-time high, 146.50Sr K-March 16
1511I'm quite positive it will outdo conventional TV in the neat future.Intelim-March 15
1510UPGRADE: Netflix (NFLX) upgraded by Jefferies from Underperform to Hold.Sr K-March 15
1509Netflix Tries to Outdo Theaters With Films a Studio Can Envy by Lucas Shaw BlooGlenn Petersen2March 14
1508Where it will break out after tight trading range last few sessions? [graphic]more100-March 13
1507Netflix’s takeover of American households just hit another milestone businessinGlenn Petersen-March 11
1506 Netflix: Plata O Plomo? seekingalpha.comKrigannie-March 11
1505Netflix is in 54% of American households thestreet.comJakeStraw1March 7
1504Netflix upgraded to buy at UBS, target raised to $175Krigannie-March 7
1503Are stake-holders biting their feeding hand?Intelim-March 6
1502 Netflix faces securities class action lawsuit seekingalpha.comKrigannie-March 3
1501Surprisingly enough, a few valid points. I'm not sold though.Intelim-March 2
1500 Short Netflix: An Unoriginal Story seekingalpha.comKrigannie-March 2
1499I do agree that it's unusual but makes me even more excited about it. Too tiIntelim-February 27
1498Please stay on topic, the topic is Netflix. SI Ron (Soup Nazi)-February 25
1497This is one weird ass trailer.Krigannie2February 25
1496What a joke, people forgot how to be self-ironic. Speaking of interesting take oIntelim-February 24
1495Then I stand corrected ;)JakeStraw-February 24
1494According to the YouTube comment section, they are! :DKrigannie-February 24
1493People are canceling their subscriptions massively!"Massively"? I findJakeStraw1February 24
1492People are canceling their subscriptions massively!Krigannie-February 24
1491Never saw so much hate for something Netflix-related. [youtube video] Check thaKrigannie-February 24
1490Netflix Bags Scorsese and De Niro's Latest investopedia.comJakeStraw-February 24
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