Granted, Netflix shares are still far from the $300 level they reached in 2011. But I'm kicking myself for having missed the bottom at $52. And after watching the first few episodes of its original series House of Cards, this weekend, there are signs that more gains are on the way.
Popular bear arguments against Netflix include its rising costs and the company's ill-timed price hike, which alienated subscribers and led to 1 million customer cancellations in the quarter following the hike. This allowed Amazon's (AMZN) Prime streaming service to gain notoriety.
More recently, however, a new Netflix has emerged. It has been one good decision after another, and these decisions have been bearing fruit as the company's fourth-quarter earnings report attests.Ahead of the report, the Street was expecting a loss of 13 cents on $935 million in revenue.
But Netflix stunned investors by reporting a profit of 13 cents a share on revenue of $945 million. In the year-earlier quarter, the company reported EPS of 64 cents. As impressive as this was, the most noteworthy aspect was the company's incredible cost management, including a 12% decline in general administrative expenses. Marketing expenses grew slightly, by 2.7%, and technology costs were up 1.7%. As noted, expenses have been a huge point of contention for bears, especially because profits dropped 90% in the third quarter due to heavy international expansion.
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