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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 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 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 Netflix originally filed to raise $86.3 million through Deutsche Bank in April 2000 , but the offering was withdrawn three months later as the IPO market began its long, dry period, one that still exists.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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ReplyMessage PreviewFromRecsDate  Sr K-07/28/2014 01:26 AM
1041Australians and Canadians Are Turning to Virtual Private Networks to Access U.S.TimF107/27/2014 09:46 PM
1040From Feb. 14, 2013  "That's why the company is naSr K-07/27/2014 12:17 PM
1039It's not funny. It shows how hard it is to predict the future. And most of tJurgis Bekepuris-07/27/2014 08:35 AM
1038Funny stuff... FUBHO-07/27/2014 03:59 AM
1037An analyst call from nine and a half years ago: Analyst cuts Netflix target to Glenn Petersen207/26/2014 07:37 PM
1036From the WSJ article on Netflix's q2 cc and report,  Sr K-07/22/2014 12:10 AM  Verizon (VZ) Comments on Netflix (NFLX) Buffering; ReviThe Ox-07/10/2014 01:46 PM
1034All-time high 468.40. Sr K107/01/2014 01:18 PM
1033Supreme Court kills Aereo — and cord-cutters' dreams To the dismay of cord-J.F. Sebastian106/25/2014 11:14 AM
1032Aereo ruling could shake up tech stocks The Supreme Court could decide as earlJ.F. Sebastian-06/18/2014 02:36 PM
1031Netflix provides speed tests:  Ron306/14/2014 03:54 PM
1030An ongoing issue for Netflix: ISPs Today an update from Netflix:  Ron106/09/2014 01:05 PM
1029Reed Hastings says Netflix has no interest in making its own video-streaming devJakeStraw-05/30/2014 11:37 AM
1028Netflix to Expand to France, Germany Later This Year U.S. Online Video Company JakeStraw105/21/2014 09:11 AM
10271st. You make a very good point about the "Big crop." Vs. "Littletripleman-05/12/2014 03:51 PM
1026>> In addition to those original productions I'm certain they will coni-node-05/11/2014 01:59 PM
1025<If they can't improve their content NFLX stands to lose share> I agTamson Fischer105/11/2014 01:45 PM
1024If they can't improve their content NFLX stands to lose share. i-node105/11/2014 11:58 AM
1023Re:content...agreed to many 'alternative' selections...I watch a lot of Savant-05/10/2014 12:50 AM
1022We just resubscribed to the DVD service as they do have some quality offerings tTamson Fischer-05/09/2014 11:49 PM
1021WRT content my wife and I are enjoying a very large number of BBC productions inTamson Fischer205/09/2014 11:42 PM
1020Savant. Funny, and I hope it never happens :) getting closer to the day/night tGottfried-05/09/2014 07:35 PM
1019Agreed about previously watched...however, I'm getting closer to the day/nigSavant305/09/2014 04:57 PM
1018Personally, the thing that keeps me on NFLX is their DVD/BluRay service. If theyJurgis Bekepuris-05/09/2014 04:26 PM
1017Improved content for Netflix, wouldn't hurt a bit...speaking as an LT subscrSavant105/09/2014 04:14 PM
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