This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
See Cramer's multi-million dollar portfolio for FREE and get his new book Get Rich Carefully! Learn More

Did Amazon's Earnings Signal End of Netflix?

NEW YORK (TheStreet) -- Investors in Netflix (NFLX) have a real problem on their hands. Management currently doesn't believe it's important to fully monetize its subscriber base. The mentality of Netflix management is akin to Nike producing one style of shoe. Instead of only selling one swoosh to each customer, Nike knows what Netflix's management hasn't figure out yet. Offering many kinds of styles and colors is a key to maximizing revenue and profits.

There have to be limits of course, but is it really appropriate for investors to have to sit idly by while the management team sets its goal for styles and colors at a grand total of one? Netflix's CEO Reed Hastings can do better than that for investors.

There is no question about the brilliance and business intellect of Hastings, as demonstrated by Netflix's crushing of Blockbuster. While highly impressive, we also see the same sort of thing happen with smaller family-run businesses from time to time. The owners and or management guide a company from zero to hero very quickly and then find they can't manage the growth anymore. Basically the company outgrows the management.

This is the key moment when management must decide if they are able to navigate in new waters and environment or not. If they can, everyone wins, but if they are not up to the task, we end up with is another flash in the pan "here today gone tomorrow" type of business.

I like Netflix as a service too. I watch mostly documentaries and some movies when I watch TV. Netflix streaming almost always performs well without any issues. Netflix has done a great job delivering what they do have in content.

Remember Palm, or how about Crocs, AOL and First Solar? These companies made big splashes for a short while, but their management teams where not up to the task of navigating through the vastly changed landscape.

It doesn't take too many tripped landmines before shareholder equity gets blown to pieces. Price increases, ease of use, programming and monetizing current customers instead of focusing on trying to gain more low-income producing customers - these are all landmines Netflix better not step on or step on again.

Stock quotes in this article: AMZN, NFLX 

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
DOW 16,501.65 0.00 0.00%
S&P 500 1,878.61 +3.22 0.17%
NASDAQ 4,148.3380 +21.3710 0.52%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs