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fell Friday despite reporting a narrower-than-expected first-quarter loss on strong revenue, as investors focused on the DVD-by-mail outfit's second-quarter outlook.

The company, whose name occasionally comes up in connection with

buyout rumors involving


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, lost $8.8 million, or 17 cents a share, in the first quarter, compared with a loss of $5.8 million, or 11 cents a share, a year ago. Backing out some items, Netflix lost $4.5 million, or 9 cents a share, in the most recent quarter, well ahead of the 21-cent loss estimate compiled by Thomson First Call.

First-quarter revenue rose 54% from a year ago to $154.1 million, about $3 million better than forecast.

Looking ahead, the company expects to lose $2.2 million to $7.2 million in the second quarter on revenue of $160 million to $165 million. The Thomson First Call revenue estimate for the period is $169.1 million. For the year, it expects to lose $5 million to $15 million on revenue of $660 million to $685 million. Analysts were forecasting $704 million.

Most of Netflix's first-quarter metrics were in line with expectations, including its 5% churn rate, which measures the pace of customer defection, and year-end subscribers, which totaled 3.02 million, up 56% from a year ago. Subscriber acquisition costs were lower than expected at $37.89, up from $36.18 in the fourth quarter.

Netflix shares fell 76 cents, or 6.2%, to $11.39 on Instinet.