Netflix warned investors that the economic downturn has taken a toll on business. Exactly how big of a toll? We'll find out on Monday, when the company reports third-quarter results.
"Net subscriber growth in July was in line with expectations but August was unusually weak," said CFO Barry McCarthy, in a prepared statement released earlier this month. "In September, the business regained momentum with results slightly below original expectations, likely due to the economic climate."
Aside from the 3-day service outage in August -- which will cost the company roughly $6.5 million -- Netflix is grappling with plunging consumer sentiment and increasing competition. The company said it ended the quarter with 8.672 million subscribers, about 300,000 subscribers short of its previous forecast.
"We believe the company is likely to continue to experience . . . headwinds with [subscriber] growth and margin improvements amid a weakening macro climate, higher investment in video streaming, and competition from Video-on-Demand services, digital cable, RedBox kiosks, and to a lesser degree, from Amazon and Apple," says Jefferies analyst Youssef Squali.
But for all the pessimism on The Street, shareholders of Netflix don't seem too panicked -- the stock edged up during much of Friday's trading session.
See Also:
- Netflix Suffers First Major Outage
- Roku Netflix Set-Top Box Is Just Shy of Totally Amazing
- Economic Meltdown or Not, Online Video Will Grow
- Microsoft Adds Netflix to XBox 360
- Netflix Is Immune to Rising Gas Prices
- Our Anti-Netflix Death Watch Watch
- Netflix CFO Doesn't Expect Much From Blu-ray
- There Are No Winners (or Losers) in the Amazon-Netflix War
