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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 Netflix originally filed to raise $86.3 million through Deutsche Bank in April 2000 , but the offering was withdrawn three months later as the IPO market began its long, dry period, one that still exists.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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1074Responding to DVD subscription decline, Netflix closes call center By Janko RoFUBHO-yesterday
1073Great idea. As a non-content provider, MFST would have the advantage of not compGlenn Petersen1October 17
1072It would be a good way for Microsoft to become relevant again, since they donFUBHO2October 17
1071If you're referring to pages 27-28 of the 6/2014 Proxy Statement, as of Apr Sr K-October 17
1070Neither company would have any major anti-trust issues. An interesting note: HasGlenn Petersen-October 17
1069With a $21 billion market cap, NFLX would be easily digestible for one of the laGlenn Petersen1October 17
1068In an interview on CNBC, Mr. Cuban said he owns more than 50,000 shares of NetflJakeStraw-October 17
1067Netflix Q3 2014 Earnings Call Transcript screen.genius.comJakeStraw-October 17
1066Glenn, There has been chatter about Apple buying NFLX... Or maybe a company likeJakeStraw-October 17
1065FWIW: [tweet]Glenn Petersen1October 17
1064Netflix's 4K/UHD Price Hike Is Its Second Huge Mistake forbes.comJakeStraw-October 17
1063I am very disappointed in their streaming content vs. what's available on DVThe Ox-October 17
1062I agree this is a buying op. HBO has some great content but they are 100millionTamson Fischer-October 16
1061It was a good report, but the guidance for non-US was lower than expected for CFSr K-October 16
1060So subscriber's, revenue & net income were all up; yet not enough... SeeJakeStraw1October 16
1059Netflix, Inc. Consolidated Statements of Operations (unaudited) (in thousanDr_of_Microcaps-October 16
1058A big miss on subscribers: Netflix reports quarterly net subscriber additions bGlenn Petersen-October 15
1057quite a dive.hdl-October 15
1056Streaming Shutdown: Redbox, Verizon give up on Redbox Instant By Mike Flacy — OcGottfried-October 6
1055Comedy actor Adam Sandler signed a deal to star in and produce four films that wSr K-October 4
1054Netflix, Arad Animation And 41 Entertainment Announce Kong - King of the Apes™, JakeStraw-October 1
1053With ‘Crouching Tiger’ Sequel, Netflix Takes Aim at Hollywood nytimes.comJakeStraw3September 30
1052Richard Branson (modeling his policy after Netflix's) Thinks Employees ShoulSr K1September 25
1051Analysts trying to help their real clients cover their shorts at retail investorWayners-September 22
1050Netflix invades Europe: Why expansion beyond the US is so critical cnet.com AltJakeStraw-September 19
1049This morning, the leading internet television network Netflix, Inc. (NASDAQ:NFLXinthemoneystock-September 16
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