Kills earnings, up 560% since 2009...discuss.

There's another thread on this. Many believe it's not sustainable long term as the movie studios will knock Netflix out of their middleman position and offer their own streaming services.

Earnings wasn't today. It is up 6% today. Why?
I have a decent amount of NFLX, so not complaining.

this probably helped:

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Netflix is rapidly expanding its international service, with plans to launch in 43 countries in Latin America and the Caribbean later this year.
The new markets -- which include Mexico, Central America, South America and the Caribbean -- will give those members access to Netflix content in Spanish, Portuguese or English. They'll be able to watch "American, local and global TV," Netflix said Tuesday.

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http://money.cnn.com/2011/07/05/technology/netflix_international/

Digg seems to be right. But I think it will make money short term. So I will ride it.

Are there any meaningful patents with this console streaming stuff? Too lazy to look it up.

Most of their subscribers will apparently be cancelling, so I hope nobody's still holding on to this...

http://texags.com/main/forum.reply.asp?topic_id=1866016&forum_id=12

i will be switching to streaming only...so they will be getting $5 less per month from me

Now would be a great time for a competitor to offer some sort of package comparable to the old Netflix plans.

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Now would be a great time for a competitor to offer some sort of package comparable to the old Netflix plans.

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That's not how this works. The only reason that Netflix has been as successful as they have is because they locked in cheap multi-year deals with the content providers, which they gave them because at the time, they underestimated the NFLX model. Starz for instance, has a four-year $25M deal that made NFLX. That deal is about to be up. Think they are going to re-sign at $25m? Nope, they want $250M. This will be the same for every source of content.

So a competitor can't just set up shop across the street with lower prices. They have to get access to the content, which also won't come cheap. This is why a lot of us have said NFLX isn't in great shape from a long-term perspective. The studios always find a way to catch-up every time we find a way to get their content to cheaply, they are just a little more slow to react than you'd expect- a lot of times because deals are for several years, and technology/media evolves faster than that.

http://tvbythenumbers.zap2it.com/2011/07/13/nbcuniversal-and-netflix-renew-non-exclusive-multi-year-tv-and-film-deal/97913/

deal renewed with NBC

Personally, I dropped my streaming service when I heard of the price increase, and don't feel that NFLX will be able to maintain its current revenue growth rate without a significant increase in subscription fees.

The content providers are going to go raise their fees, and NFLX is going to have to absorb that cost or pass it on at the risk of losing subscribers.

80 PE for this company that's going to be squeezed by tech giants like Amazon, Apple, and Google is crazy.

I personally expect the floor to fall out of this thing.

Netflix and Blockbuster are both going to get annhilated when bandwidth picks up a little more and DVD's and Blu-Rays become obsolete. At that point, Comcast and At&T and every other cable provider will blow them out of the water.

Netflix should have focused more effort trying to partner with a big cable/internet provider and less time and money attempting to develop original content. Fact is, the one thing they provide specifically that most others don't will be obsolete pretty soon.

Short term, I doubt most people with the disposable income and want for Netflix will actually start leaving them, but all its going to take is for a big cable/internet provider to provide content online and Netflix is toast.

ATM, your scenario is 100% true, but the thing is that's not even the only way their ship could sink. I just think this is crazy.

Netflix streams movies, doesn't it? And I read it makes 90% of its revenue.

The DVD model will become obsolete.

NFLX shot up today, so the market doesn't agree with doomsday predictions. At least not yet.

The problem is that the internet/cable providers almost all either have the leverage to or already have better content deals with television, premium or not. What's to stop them from going in and completely blowing Netflix out of the water on that front.

And somebody already nailed it re: movie studios. They always eventually get a big piece of their content pie... something they aren't yet with DVD/Blu-Ray rental. The way they can is to sign their content over to cable companies for on demand rental the way TV channels do. Once it happens, Netflix is completely screwed.

It hit my stop loss limit today, so I sold.
I will look to buy back at a lower cost!

Earnings to be announced after hours Monday 7/25.

Not bad, I was right. I sold at $297 and its at $276. What do I do now? Do I buy? Or just watch?
Something tells me it will smash earnings and shoot up. Investors will forget the hike. Still, I saved about a 8% fall.

bought NFLX @ $275.56, sold the Aug $270 call for $19.95

5.2% return in 3 weeks if the call is executed, 7.2% reduction in purchase price if not, cost basis reduced to $255.61

I'd guess the stock will be shaky till the street sees how many people cancel half or all their subs around the September price hike.

Extended hours:
Last: 264.32 Change: -17.21 (-6.11%)

Is there a call that anyone is listening to?

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bought NFLX @ $275.56, sold the Aug $270 call for $19.95

5.2% return in 3 weeks if the call is executed, 7.2% reduction in purchase price if not, cost basis reduced to $255.61

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could be interesting tomorrow!

I may buy my $270 calls back on the cheap tomorrow and re-sell some deeper depending on how it shakes out.

this could be an early christmas

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Netflix beats by $0.14, reports revs in-line; guides Q3 EPS below consensus, revs below consensus

Reports Q2 (Jun) earnings of $1.26 per share, $0.14 better than the Capital IQ Consensus Estimate of $1.12; revenues rose 51.7% year/year to $788.6 mln vs the $791.2 mln consensus. NFLX sees Q3 Total subscribers of 24.6-25.4 mln . Co issues downside guidance for Q3, sees EPS of 0.72-1.07 vs. $1.08 Capital IQ Consensus Estimate; sees Q3 revs of $799.5-828.5 mln vs. $845.58 mln Capital IQ Consensus Estimate.

Pricing Commentary: It is expected and unfortunate that our DVD subscribers who also use streaming don't like our price change, which can be as much as a 60% increase for them from $9.99 to $15.98, when it goes into effect for each subscriber upon their renewal date in September. Some subscribers will cancel Netflix or downgrade their Netflix plans. We expect most to stay with us because each of our $7.99 plans is an incredible value. We hate making our subscribers upset with us, but we feel like we provide a fantastic service and we're working hard to further improve the quality and range of our streaming content in Q4 and beyond.

Pricing Changes and Effect on Subscribers: In Q3 we will see only the negative impact of the pricing change, given that the announcement was early in the quarter and that the increases won't take effect until late in the quarter (September 15th on average). We expect domestic net additions in Q3 to be lower than the previous year Q3, and because of the timing of the price change, revenues will only grow slightly on a sequential basis. In Q4, we expect domestic net additions to return to a pattern of year-over-year growth while revenue will reflect a full quarter's impact of the pricing changes, which could result in Q4 being our first billion dollar global revenue quarter, driven by strong U.S. performance.

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Netflix really is in a tough spot moving forward:

-The big boom is content providers demanding more and more of the pie. Even crappy Star Trek episodes are demanding millions and millions to be LEASED. Netflix attempting to develop original content is a reflection of their desperation here.
-Cable providers have the opportunity to cut into their streaming business two-fold. One, they are going to start charging heavy subscribers for their usage- making Netflix streaming less attractive. Second, they will become more sophisticated with their own on-demand programming competition to netflix.
-New competition from multiple well-financed online competitors- namely Amazon and Apple. Even if unsuccessful, they will continue to drive up content acquisition costs.
-Redbox & free streaming service competition on the low-end of pricing, hurting Netflix's ability to raise prices and keep customers.
-People are abandoning the dvd side of their business. You could say that's good because that lowers their mailing costs, but that was a very unique competitive advantage they are losing. Plus they are going to run deeper into all the aforementioned problems with the streaming business.

-The one bright side of the huge content acquisition costs is that could really raise barriers to entry into this business, allowing them to leverage that advantage into dominant growth in many markets around the world. There is a huge demand for American content that is not being fulfilled in many places. But again, all along the way the studios and broadband providers will be demanding more and more of their revenue in a best case scenario.

One thing I would be interesting in researching is which studios will benefit the most from this trend.




[This message has been edited by Aston04 (edited 7/25/2011 3:41p).]

down 10% in after hours trading.

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down 10% in after hours trading.

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kneejerk

money to be made here!

Blue-eyes, when do you plan on reselling the calls if you buy them back tomorrow? Are you expecting a recovery within a week or two? What exercise price are you planning on? Just curious as to your strategy.

that's the problem with writing covered calls...you can get so enamored with the game that you forget that you just took a bath on the underlying stock.

I will say that blue eyes got a good price for his calls for such a near date, both of which gives lots of flexibility.

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that's the problem with writing covered calls...you can get so enamored with the game that you forget that you just took a bath on the underlying stock.

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as opposed to what? having a stock you took a bath on WITHOUT the reduction in cost basis from writing the calls in the first place?

i.e. stock XYZ. Two people buy it at $50

person A sells an out of the money call with a strike price of $52 for $2. The stock falls to $45 on bad news, the call isn't executed, and person A is holding a $45 stock whose cost basis is $48.

vs.

person B has the stock, it falls to $45, and their cost basis is $50.

which would you rather be?

What about the alternate example of the stock jumping to 60?

pocket the profit and move on to the next trade

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Blue-eyes, when do you plan on reselling the calls if you buy them back tomorrow? Are you expecting a recovery within a week or two? What exercise price are you planning on? Just curious as to your strategy.

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not sure yet. I don't put a lot of stock into the "after hours" trading as many times it doesn't represent what will happen the next day.

I'm just going to have to watch the stock action to see if buying back the call and selling another presents a tempting trade.

Just sold my long puts. That was a wild ride, but finally came up green after last night.