Netflix Revises 3rd Quarter Guidance

Netflix issued a press release this morning:

LOS GATOS, Calif., Sept. 29 /PRNewswire-FirstCall/ -- Netflix Inc. today announced revised guidance for the third quarter, including a charge for anticipated expenses related to the settlement of litigation. The revised guidance is:

-- Ending subscribers of 3.590 million to 3.610 million, from 3.35 million to 3.50 million. -- Revenue of $173.5 million to $175.5 million, from $172.5 million to $176.5 million.

Netflix also said that its third-quarter results will reflect anticipated settlement expenses associated with the previously disclosed consumer class action, Frank Chavez v. Netflix, et al. Settlement expenses in the quarter are expected to range from $3.0 million to $4.0 million. The settlement remains subject to court approvals.

-- Including the non-recurring settlement expenses, GAAP net income guidance has been revised to $2.5 million to $5.3 million, from $4.5 million to $8.0 million. -- Excluding the non-recurring cost of the settlement, net income is expected to be $6.5 million to $8.3 million for the quarter.

"Our business continues to perform exceptionally well, with rapid subscriber growth and operating efficiencies enabled by market leadership," said Reed Hastings, company CEO and Co-founder.

Comments

[Cochran]

Four Million dollars baby.

NETFLIX INC.: Consumers File Fraud Suit Over DVD Delivery in CA
---------------------------------------------------------------
Netflix, Inc. faces a class action filed in California Superior
Court, City and County of San Francisco by Frank Chavez,
individually and on behalf of others similarly situated.

The complaint asserts claims of, among other things, false
advertising, unfair and deceptive trade practices, breach of
contract as well as claims relating to the Company's statements
regarding DVD delivery times. The complaint seeks restitution,
disgorgement, damages, and injunction and specific performance
and other relief.

How can anyone in their right mind think this is a good thing? What are the possible outcomes?

Removal of the term 'unlimited' from advertising? So what. Does anyone here really believe that heavy users would stop complaining if that was the only thing that changed?

Faster shipping to heavy users? Sure, along with higher prices to cover increased demand. Good for heavy users maybe, but bad for the rest of us.

Rental caps. Sure, that'd finally pull the legs out from under heavy user complaints, but I like the freedom to rent 3 disks one month and 12 the next - I don't want caps.

NetFlix going bankrupt. The complainers would love that, right up until they find out how much BlockBuster raises prices with no real competition.

I guess I'll continue to hope for a fair use policy. At least that would limit the affects of this kind of thing to those who deserve it.

[CJ]

It's pretty hard to have a business pricing model like Netflix's and not get sued.

A better pricing structure would be a fixed, monthly customer charge based on number of rentals out at a time, where Netflix would make their profit, and a separate, variable, pass-through delivery charge for each DVD processed. As a high volume user, I go for this pricing scheme in a heart-beat compared to the current once-size-fits-all pricing with uncertain delivery turn-around times.

A man has a better idea, starts a company that benefits everyone, works hard to improve the service (again, benefiting everyone), and what does he get for his efforts? People hate him and sue him.

Anyone read Atlas Shrugged?

I think the "unlimited" issue was not a problem as long as the Post office was teh only variable. But advertsing unlimited and then intentionally targeting those who are not light or rare renters for poorer service is a problem.

I am struck by the person against this consumer protection who says they want "the freedom to rent 3 disks a month." huh?

Let's face facts. Netflix central corporate slogan: "No More Late fees" is is a critique of their rival. The assertion was they are on the side of the consumer. this case shows that is not true.

'...who says they want "the freedom to rent 3 disks a month." huh?'

Why is that confusing?

Say they institute an 8/month rental cap. You can never get more than 8 disks. You're now compelled to try to get 7 or 8 disks every month to maintain reasonable value. You can no longer use the service the way you want.

With the current system (with no fixed rental caps), you have the freedom to rent fewer one month and more the next without sacrificing value.

[manuel]

"A man has a better idea, starts a company that benefits everyone, works hard to improve the service (again, benefiting everyone), and what does he get for his efforts? People hate him and sue him."

Great minds think a like.

http://www.hitler.org/artifacts/volkswagen/

[MikeK]

Manuel,

First you accuse Netflix of distributing spyware, then being funded by terrorists. Now you're comparing Reed Hastings to Hitler. All because of a bit of throttling and some scratched discs? Your own charts show that Blockbuster is not that much of an improvement over Netflix.

Do us all a favor and quit subscribing to the service offered by this "evil company." I still don't get why you hate Netflix so much (maybe you have nothing better to do?).

I have to admit you were somewhat entertaining up until now... Hitler killed more than 6 million Jewish people. How can you compare anyone to him? (OK, maybe a few serial killers and Stalin).

You need to take a break from watching movies and go for a walk or something.

- Mike

[Boris]

BLOWOUT QUARTER

the sequential quarterly subscriber
growth of 14% to 3.61 million is
an amazing accomplishment.

i believe this insures Netflix has
good visibility to average more then
5 million subs in 2006, thus
sales per share will be $20+
and gross profits per share $9+.
both these metrics are greater
greater then Amazon/Ebay and
thus the shares would need to
rise to $80+ to trade at Ebay/Amazon
9x gross profits per share equivalent.
I hope Netflix gets there.

also if Blockbuster sees subscriber
defections to Netflix, then
BB Online's cost to offer 3 disc
will rise from $21.50 to approx
$23 and then $25 within next
1-2 operating quarters.
One estimate suggest BB Online
will shutter after holidays.
and BB president likly to leave.
They voted him out by 77% last May.

Ummm, how many people hate Hitler for conceiving the peoples car? What a stupid comparison.

Your arguments are getting more and more desperate. You should slink off before more people realize that even *you* don't believe your own spiel anymore.

[A. Rickey]

Commentor "Cochran" above, rejoicing so mightily at "four million dollars, baby," should think on this: of the $4m that will come out of Netflix bottom line, the vast majority of it will not go to benefit any Netflix customer. The class action settlement mentions fees of $2.5 million to the attorneys, money that will not go in any way to improving subscriber service.

With victories like this, thank God there aren't more battles to win.

[Christopher Ambler]

Might I direct you to a site I set up today: http://www.NetflixSettlementSucks.com

I am, understandably I hope, livid.