Netflix announced its earnings for the third quarter of 2012, and its stock price has fallen nearly 10% after it slashed its subscriber estimates for the year. It generated around $905 million in revenues last quarter, and made a net profit of $7.7 million. It ended the quarter with around $370 million in cash and cash equivalents.
It added around 1.85 million net streaming subscribers, and its total subscriptions now add up to 25.10 million in the US and 4.31 million internationally. Paid subscriptions account for a large portion of that, with 23.80 million in the US and 3.69 million internationally. Its DVD business continues to shrink as a portion of its overall business.
With the competition in the online streaming space increasing thanks to Hulu, Amazon and HBO, Netflix is trying hard to license more content and also create its own original content.
Reed Hastings wrote in the shareholder letter:
Dear Fellow Shareholders,
In Q3, our global streaming membership grew by nearly 2 million, and our 29 million streaming members enjoyed over 3 billion hours of TV shows and movies from Netflix.
We have compelling exclusive content, an outstanding member experience, and a brand that stands for high quality streaming entertainment. These strengths, combined with the industry-wide forces of improving Internet devices and bandwidth, are fueling our rapid growth around the world.
We believe Internet TV will grow for the next few decades, and that some firms will build extremely valuable businesses providing consumers an incredible, personalized Internet TV experience.
Society has had over 50 years of linear TV dominance where channel owners decide what and when people can enjoy content. With Internet TV, consumers get power, control and convenience. They can decide what, when, and where they want to watch. They can pause and resume anytime. They can enjoy content on a broad range of amazing devices.
Internet TV is the future of television, and we are leading the change.
via SEC – Netflix