Netflix beat projections and in the face of increasing competition still managed to grow and profit last quarter (Netflix press release). I listened the Q4 2004 earnings conference call and heard an optimistic Reed Hastings talk about the past quarter and what lies ahead.
Here's the important stuff:
Netflix believes that Blockbuster may have a crucial weakness in their huge debt load (more than $1 billion), declining store revenues, higher churn rate (13%?), lower gross margin, and higher customer aquisition costs ($50?). Because they are focused on moving customers to the online service, they are further weakening the stores. Netflix estimates that Blockbuster has entered the business agressively, spending nearly $100 million and opening 23 distribution centers.
Based on the continued growth in the face of competition, Netflix believes that there is room for several players and is optimistic about 2005.
Here are the first reports:
Forbes: Update 2: Netflix Fourth-Quarter Profit Doubles
Investors.com: Blockbuster Brushes Off Netflix CFO's Claims
CBS Marketwatch: Select Tech Stocks Shares Rally After Hours
Mercury News: Netflix's Fourth-Quarter Profit Doubles Despite Tougher Competition
Thanks to Zee for contributing to this story.