Monday, April 19, 2010

Netflix Inc. (NASDAQ: NFLX): Q1 Earnings Preview 2010

Netflix is scheduled to release its Q12010 earnings after the closing bell on Wednesday, April 21, 2010. Analysts, on average, expect the company to report earnings of $0.54 per share in the first quarter with estimates ranging from a low of $0.48 per share to a high of $0.60 per share. Revenues for the quarter are estimated to be $493.07 million. In Q12009, the company reported earnings of $0.37 per share on revenue of $394.10 million.

Netflix, Inc. provides online movie rental subscription services in the United States. The company offers its subscribers access to a library of movie, television, and other filmed entertainment titles on digital versatile disc (DVD). The company has over 100,000 DVD titles and a library of over 12,000 titles which can be streamed online.

In the preceding Q12010, the Los Gatos, California-based company reported net income of $30.9 million or $0.56 per share for the fourth quarter, compared to $22.7 million or $0.38 per share in the prior year quarter.Excluding stock-based compensation, Netflix earned $32.7 million, or 59 cents a share. Revenue for the fourth quarter rose 24% to $444.5 million from $359.6 million in the year-ago quarter. Analysts, on average, expected the company to report earnings of $0.45 per share on revenue of $445.56 million.

The company has been rapidly acquiring subscribers and steadily gaining market share at the expense of its competitors. The company ended the fourth quarter with about 12.3 million subscribers, a 31% improvement from the year-end 2008 total of 9.39 million. The company saw subscriber rolls rise 10% from previous quarter. By the end of the first quarter, Netflix expects to have 13.5 million to 13.8 million subscribers, and 15.5 million to 16.3 million by the end of 2010.

For the first quarter 2010, the company expects GAAP earnings of $26 million to $32 million, or $0.47 to $0.58 per share, and revenue of $490 million to $496 million.

For the full-year 2010, the company estimates GAAP earnings of $125 million to $137 million, or $2.28 to $2.50 per share, and revenue of $2.05 billion to $2.11 billion.

Netflix is committed to approximately 10% operating margins for the full year 2010. Netflix also has plans for international expansion of its online streaming service in the second half of 2010.

Recently, the company officially brought streaming movies and television shows to the 28 million Wii users in the U.S.

Among other developments during the quarter, Netflix released an iPad-native application that would enable US subscribers to instantly stream TV shows and movies to the tablet device.

In terms of stock performance, Netflix shares have gained nearly 66 percent since the beginning of the year.

Full Disclosure: None.
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