Earnings Preview: Netflix

Netflix (NFLX) is expected to report Q1 earnings after market close Monday with a conference call scheduled for 5:00 pm ET on Monday, April 21.

Guidance

Analysts are looking for a profit of 21c on revenue of $326.87M. The consensus range is 16c to 25c for EPS, and revenue of $323.8M to $329.18, according to First Call. In February the company forecast Q1 EPS 15c to 22c, up from its prior 13c to 21c view, and narrowed its Q1 revenue range to $325M to $328M from prior guidance of $323M to $328M.

Analyst Views

Two research firms believe that moves recently made by Blockbuster (BBI) could benefit Netflix (NFLX). Piper Jaffray's analysis of Nielsen AdRelevance data from January and February suggests Blockbuster is focusing on stores and profitability, not Total Access. Piper, which has a Buy rating on Netflix, believes Netflix will continue to gain share in the DVD-by-mail market as both companies ready their go-to market strategies for movie downloads.

Another benefit for Netflix could occur if Blockbuster acquires Circuit City (CC). Thomas Weisel believes the potential transaction would be a positive for NFLX, as it may reduce Blockbuster's presence in the by-mail DVD rental business in the short-term. Additionally, a Blockbuster/Circuit City combination could help accelerate Netflix's recently improved performance.

Should Blockbuster de-emphasize DVD rentals, Roth Capital said Netflix should be able to meet its 2008 goals, squeezing short-sellers; however, the firm thinks Netflix will encounter much more competition over the next two to three years.