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TheStreet Open House

The 5 Dumbest Things on Wall Street: Oct. 14

5. Reed's Misdirection

Somebody get our good friend Reed Hastings over at Netflix (NFLX) a compass because it's clear he has no idea which direction he is taking the movie rental service.

Yes, barely a month after announcing his Solomonesque plan to split the company in half, the company's less-than-wise CEO revealed on Monday that Netflix has decided to keep its DVD-by-mail and its streaming services under the Netflix umbrella. In September, Hastings came under heavy fire for the not-so-sagacious move of renaming its DVD business "Qwikster".

"It is clear that for many of our members two Web sites would make things more difficult, so we are going to keep Netflix as one place to go for streaming and DVDs," said Hastings in a blog post.

Well, so long Qwikster. That was, well, quick. Anybody want to buy a domain name real cheap?

Of course, Netflix subscribers are all wondering 'what's in a name' anyway because the July price hikes that initiated all this madness -- and a 60% drop in the stock price -- are staying put, even if the name Qwikster is on its way out. So while Hastings may think that nixing Qwikster and possibly adding new episodes of TV cult hit Arrested Development will appease his irate clientele, the bottom line is that Netflix users will continue to seek alternatives until he appeals to their bottom lines.

And Netflix customers are not the only folks that Hastings needs to suck up to. He also needs to regain some credibility on Wall Street ahead of the company's quarterly release on October 24th. In September, Netflix backtracked on its previous domestic subscriber outlook, shaving about 1 million customers off its total, mostly defections from the DVD-by-mail plan after the price hike announcement. Now this lightning fast backtrack has investors and analysts wondering just how bad the subscriber losses may have gotten.

Put simply, Hastings better find his way soon, or else he's going to find Netflix up the creek without a paddle.

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