Netflix Stock Jumps 25% in Final Quarter

Netflix’s stock rose 25% after the company beat revenue estimates for its fourth quarter in 2012. The company posted revenues of $1 billion for the quarter, compared to an initial estimate of £935 million.

At the same time it announced it had added 2 million domestic streaming subscribers increasing the total number of domestic subscribers to 27.1 million.

The quarter also saw an additional 1.8 million international streaming users join, taking the international total to 10 million, although this part of the business is not currently profitable.

A survey completed by the Royal Mail has found that 73% of UK SMEs are looking to expand abroad in 2013, and are confident that expanding abroad will help them achieve their growth goals. Cath Kidston, Dune and Missguided are just a few UK companies that are expanding abroad over the next year.

In direct contrast to the lack of international profit, Netflix’s domestic streaming generated a profit of $109 million in Q4 2012.

DVD subscribers continue to drop off. Around 380,000 DVD subscribers left in the quarter bringing the total to 8.2 million. This is down substantially from the 11 million Netflix had predicted for this quarter.

In a letter to its shareholders, CEO Reed Hastings and CFO David Wells wrote: ‘Our holiday season was particularly strong, driven by consumers buying new electronic devices, including tablets and smart TVs’. This could also be the reason for such a sharp decline in DVD subscribers as more people swap from hardware to online software.

Looking to the competition they noted that of Netflix’s top 100 TV shows and top 100 movies, Amazon had just 73. American streaming website Hulu, meanwhile, had 27. Another streaming and DVD rental company Redbox had 12.

Netflix were also looking forward to the current quarter, as they expand their original series ‘House of Cards’. Financially Netflix are expecting a ‘relatively flat’ increase in its profits throughout this quarter.

Pic source: Netflix

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