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netflix, earnings

Against all odds, streaming-video giant Netflix is actually making money and signing up new customers. The company beat Wall Street estimates with better-than-expected fourth quarter results, including a well-needed subscriber boost, it announced today.

Netflix had a particularly rocky 2011, with a 60 percent price hike on combined streaming-and-DVD rental plans and a failed plan of splitting Netflix into two companies. The company was punished with a loss of more than half of its stock price. Chief executive Reed Hastings ended up looking pretty bone-headed because the company appeared to wholly ignore its customers’ feedback.

For the fourth quarter, the company earned revenue of $876 million compared to revenue of $596 million in the year-before quarter. Net income fell to $41 million from $47 million in the year-before quarter. Earnings per share were $.73 per share compared to $.87 per share a year ago.

The best news for the company is a boost in subscribers. Netflix ended 2011 with 24.4 million U.S. subscriptions, which is better than last quarter’s 23.79 million subscriptions. Investors had been dismayed at the loss of more than 800,000 subscribers posted in the third quarter, but things now appear to be back on track.

The company had warned it would likely post losses because of costly international expansion into Europe and Latin America. But since it beat Wall Street expectations of $0.54 a share and $857 million in revenue, Netflix appears to be in a surprisingly stronger position.

Netflix’s stock price has risen by more than 10 percent to about $105 per share in after-hours trading, a sign that investors love the news.


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