Slow Growth Sinks Netflix
SAN FRANCISCO -- Shares of online movies rental company
Netflix
(NFLX) - Get Report
plunged more than 11% after the company forecast a slowdown in subscriber growth during the current quarter.
Total subscribers in the second quarter are expected to be 8.3 million to 8.5 million. That's only slightly ahead of the 8.24 million total subscribers Netflix had at the end of the first quarter.
By contrast, Netflix enjoyed a 10% increase in total subscription between the fourth quarter of 2007 and the first quarter of this year.
Disappointed investors sold shares of Netflix, which fell $4.32, or 11.2%, to $34.90 in after-hours trading. The stock had rose nearly 76% over the last three months, compared to its rival
Blockbuster
(BBI) - Get Report
, which has fallen about 8% during the same period.
Gross subscriber additions in the first quarter increased 23% from a year ago to 1.86 million. Gross margin for the first quarter declined to 31.7% from 36.1% a year ago.
Net income for the first quarter grew 36% to $13.4 million, or 21 cents a share, compared with net income of $9.9 million, or 14 cents a share, the year before.
Excluding charges, the company reported net income of $15.2 million, or 23 cents a share, vs. net income of $11.5 million, or 16 cents a share, a year ago.
Revenue grew 7% to $326.2 million from $305.3 million a year ago.
Analysts were expecting revenue of $326.87 million and earnings of 21 cents a share.
For the second quarter, Netflix forecast revenue in the range of $334 million to $339 million and net income of $21 million to $27 million. Including items, the company said EPS is likely to range from 33 cents a share to 42 cents a share.
Analysts polled by Thomson Financial are expecting revenue of $335.82 million and EPS of 40 cents.
For the full year, the company said revenue is likely to be in the range of $1.35 billion to $1.39 billion, up from its earlier guidance of $1.34 billion to $1.38 billion.
Netflix guided net income of $75 million to $83 million, unchanged from its earlier outlook and said EPS, including charges, will be $1.16 to $1.29.
That is in line with analysts' expectations of revenue of $1.36 billion and earnings of $1.26 a share.
Total subscribers for the year is expected to be 9.1 million to 9.7 million, up from 8.9 million to 9.5 million, forecast earlier, said Netflix.








