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Andrew Shapiro  

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  • Netflix: New Competition a Threat to the Multiple, Not the Business [View article]
    "Is Netflix Abandoning Its Business Model Again?"

    moviecitynews.com/2011.../
    Mar 16, 2011. 05:45 PM | Likes Like |Link to Comment
  • Greater Pain Ahead for Netflix [View article]
    2 articles on new online movie rental service Zediva Targeting Netflix with $1.99 Rentals $NFLX

    www.pcmag.com/article2...

    www.blackbookmag.com/a...
    Mar 16, 2011. 03:23 PM | 3 Likes Like |Link to Comment
  • Netflix's Streaming Cost per Movie Drops 50% From 2009 [View article]
    Let us not forget that despite the lower cost to Netflix for the streaming, its not just the last mile providers who have problems with all the nflx traffic.

    "Ohio University Blocks Netflix, Backpedals"
    By Janko Roettgers Mar. 15, 2011, 2:26pm PT

    gigaom.com/video/ohio-.../
    Mar 16, 2011. 03:17 PM | 2 Likes Like |Link to Comment
  • Netflix (NFLX +0.9%) is reportedly in negotiations to acquire a drama series which would be its first original TV show. Netflix could be looking to cement its high growth by following the strategy of HBO, whose original titles have played a big part in its success.  [View news story]
    Really - GS backing House of Cards production co?? - if correct Wow! Total reversal of investment opinion on no new news and then this potential costly purchase of content to a GS backed production company. - GS seems to be really primping and priming to win the 'beauty contest' to lead an inevitable NFLX secondary to raise funds to buy content like this.
    Mar 16, 2011. 03:14 PM | 1 Like Like |Link to Comment
  • Netflix's Streaming Cost per Movie Drops 50% From 2009 [View article]
    I note that this is pricing to stream a movie not the much higher cost to Netflix of purchasing/licensing content to distribute. Netflix may continue to gain efficiencies and economies of scale in the cost of delivering content, keeping cost growth at lower level than revenue growth. However, the company's recent success of growing revenues faster than costs to license or acquire content has or will soon come to an end. Past content purchases for fixed costs are most likely to be renewed at much higher prices and with variable cost features that will reduce Netflix' windfall from subscriber growth. Also growth rates of netflix subscriber base are most likely to slow down due to sheer size, market saturation and new competition issues
    Mar 16, 2011. 12:14 PM | 2 Likes Like |Link to Comment
  • Netflix (NFLX +0.9%) is reportedly in negotiations to acquire a drama series which would be its first original TV show. Netflix could be looking to cement its high growth by following the strategy of HBO, whose original titles have played a big part in its success.  [View news story]
    Guess NFLX mgmt changed its mind - "Generally, I'm a believer in circle of competence," Hastings told investors in January. "When we start taking creative risks--that is, reading a script and guessing who might be good to cast in it--it's not something that, fundamentally as a tech company or a company run by a tech CEO like myself, we're likely to build a distinctive organizational competence in."

    www.fastcompany.com/17...
    Mar 16, 2011. 09:16 AM | 1 Like Like |Link to Comment
  • Shorting Netflix: Lessons From My Poorly Timed Momentum Trade [View article]
    No they upgraded to win the 'beauty contest' to lead the inevitable secondary stock offering that has to take place to provide the funding to pay for
    1) renewing existing content
    2) purchasing new content.
    3) upfront losses when entering int'l markets
    Mar 16, 2011. 09:11 AM | Likes Like |Link to Comment
  • Netflix (NFLX +0.9%) is reportedly in negotiations to acquire a drama series which would be its first original TV show. Netflix could be looking to cement its high growth by following the strategy of HBO, whose original titles have played a big part in its success.  [View news story]
    Content has a cost that has to be paid for with precious cash or newly issued shares. This purchase of a series, that hasn't even aired its pilot, is rumored to be around $80-100MM.

    mediamemo.allthingsd.c...
    Mar 16, 2011. 08:34 AM | Likes Like |Link to Comment
  • Do Netflix Shares Deserve a $270 Valuation? [View article]
    new Bandwidth problems. Is this the only campus where there is an issue?
    "Ohio University Blocks Netflix, Backpedals"
    By Janko Roettgers Mar. 15, 2011, 2:26pm PT

    gigaom.com/video/ohio-.../
    Mar 15, 2011. 07:37 PM | 1 Like Like |Link to Comment
  • Netflix Is Cooked; Get Out of Amazon and Coinstar As Well [View article]
    Bandwidth problems enlarging -
    "Ohio University Blocks Netflix, Backpedals"
    By Janko Roettgers Mar. 15, 2011, 2:26pm PT

    gigaom.com/video/ohio-.../
    Mar 15, 2011. 07:35 PM | 1 Like Like |Link to Comment
  • Shorting Netflix: Lessons From My Poorly Timed Momentum Trade [View article]
    Even using the fantasyland projections thrown out by the Goldman analyst, Take a look at what remarkable valuation she is placing on the business.

    Let's us break down and analyze Ms. Chung's near term $300/share target, which is a $16.8 BILLION valuation.

    Being generous, take her estimated TRIPLING of subscribers to 60 million in four years. That is $280 of EV per estimated 4-years down the road subscriber. Next Chung has operating margins expanding at an ACCELERATED pace to 20%, I guess based on assumption that the large fixed portion of netflix costs will remain fixed. So if I give her the absolutely ridiculous margin assumption of 20% (whereby she assume content providers remain so incompetent as to renew again with a fixed, rather than variable charge for content; and pipeline providers also continue to charge a fixed charge) we divide by this 20% to obtain the revenues necessary to support the EV/subscriber = $1400 of imputed revenue. Remember this is per estimated 4-years-down-the-road 60-MM subscriber base. Now with that tripling of subscribers - these are not multiple DVD/mnth plans but mostly streaming only plans at $8/month. I am being generous when I divide by a high avg monthly sub cost of $10/month and you get 140 months or ALMOST 12 YEARS of revenue stream required from the estimated "4-years down the road subscriber" base. Note this is not on current subscriber base but AFTER the next four year's rapid estimated S curve growth gets Netflix, possibly to 60MM subscribers and with absolutely ridiculous assumption of expanded margin to 20%. If you lower the subscriber base or monthly avg subscription price or use a realistic op margin and the number of years required for the 'annuity' stream to not be disrupted goes up from 12 years substantially.

    The Goldman Sach recommendation is pure pimping for the lead role in a secondary stock offering. Some things on Wall Street will never change.
    Mar 15, 2011. 06:28 PM | 3 Likes Like |Link to Comment
  • Shorting Netflix: Lessons From My Poorly Timed Momentum Trade [View article]
    The goldman analyst change of neutral opinion from only a few weeks ago to an upgrade today with an amazing target of $300/sh or 16.8 BILLION valuation illustrate how wall street's trading churn tis even worst than netflix' subscriber churn.

    While the Goldman Analyst , Chung, now raises to her ridiculous target and valuation because the demand and market for video streaming is huge, the issues of bandwidth caps triggering overage charges for users and new competition raising content costs remain. Frankly the issues are more visible now than when Chung wrote her neutral piece. The demand for video streaming is no larger now that when she first initiated too.

    Finally, the large and growing market for internet video assure that user's cost of bandwidth for streaming will rise and sensitivity to quality of content will rise accordingly raising the demand and cost of top-notch content.

    Goldman analyst's projected expectations are pure fantasy intended to do one thing - attract the lead in Netflix’s $NFLX inevitable secondary stock offering.
    Mar 15, 2011. 06:11 PM | 3 Likes Like |Link to Comment
  • Goldman Sachs Upgrades Netflix To Buy [View article]
    Any guess who is going to lead the secondary stock offering?
    Mar 15, 2011. 10:11 AM | Likes Like |Link to Comment
  • AT&T will cap data usage for its internet customers, and will charge anyone who goes over the limit starting May 2. The new limits come as service providers try to manage users' ever-growing demand for high-bandwidth applications.  [View news story]
    not a good thing for video streamers like $NFLX or their users.
    Mar 14, 2011. 09:47 AM | 2 Likes Like |Link to Comment
  • Netflix: Can Its Business Model Survive? [View article]
    AT&T will cap DSL and U-Verse internet, impose overage fees; www.engadget.com/2011/.../

    This raises the costs for either NFLX or users for the same experience in watching currently offered content. Increase in churn will result, especially if this tiered pricing spreads to other broadband carriers.
    Mar 14, 2011. 01:54 AM | Likes Like |Link to Comment
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