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Netflix (NFLX -3.2%) shares slide after the company late Friday announced a lawsuit settlement...

Netflix (NFLX -3.2%) shares slide after the company late Friday announced a lawsuit settlement retroactively applied to its recently announced Q4 results. NFLX new EPS for the quarter is $0.66, it says in a year-end SEC filing; earlier, it had reported earnings of $0.73 on sales of $876M.
Comments (7)
  • Canary Cash
    , contributor
    Comments (471) | Send Message
     
    unbelievable |ˌənbəˈlēvəbəl|
    adjective
    not able to be believed; unlikely to be true : unbelievable or not, it happened.
    • so great or extreme as to be difficult to believe; extraordinary : your audacity is unbelievable.
    13 Feb 2012, 02:40 PM Reply Like
  • Andrew Shapiro
    , contributor
    Comments (1882) | Send Message
     
    Note Netflix earnings release and call was January 25, 2011 touting higher earnings than what the 10-K now says.

     

    Netflix 10-K footnote 11
    http://1.usa.gov/wJ8GoA

     

    11. Subsequent Event
    Subsequent to December 31, 2011, the Company engaged in mediation of a legal claim pending in the Northern District of California made in January 2011 related to the Company’s compliance with the Video Privacy Protection Act. This mediation resulted in a settlement of the matter which includes payment of $9.0 million, which is recognized in the Consolidated Statement of Operations for the year ended December 31, 2011, and is anticipated to be paid in 2012. The Company had previously evaluated this claim and determined it to be immaterial and that any potential loss was not probable. Accordingly, no amount had been accrued prior to the mediation and settlement.
    13 Feb 2012, 03:34 PM Reply Like
  • Canary Cash
    , contributor
    Comments (471) | Send Message
     
    favorite - "The Company had previously evaluated this claim and determined it to be immaterial and that any potential loss was not probable."
    13 Feb 2012, 03:42 PM Reply Like
  • Canary Cash
    , contributor
    Comments (471) | Send Message
     
    new favorite - from note 5 - "On January 27, 2012, a purported shareholder class action suit was filed in the United States District Court for the Northern District of California against the Company and certain of its officers and directors. The complaint alleges that the Company issued materially false and misleading statements regarding the Company’s business practices and its contracts with content providers, which lead to artificially inflated stock prices. The complaint alleges violation of the federal securities laws and seeks unspecified compensatory damages and other relief. A second suit was filed on January 27, 2012, alleging virtually identical claims. Management has determined a potential loss is reasonably possible however, based on its current knowledge, management does not believe that the amount of such possible loss or a range of potential loss is reasonably estimable."
    13 Feb 2012, 03:46 PM Reply Like
  • FCARONE
    , contributor
    Comments (353) | Send Message
     
    NFLX is a messy company run by a person who lacks conviction. This company will disappoint more often than not. It's ventures in Europe will not yield the promoted returns. Its future is murky as the unexpected is now to be expected. Lack of clarity and confidence in leadership always end badly, The stock is well overpriced and the market will correct this in due course.
    14 Feb 2012, 01:27 AM Reply Like
  • J Mintzmyer
    , contributor
    Comments (3657) | Send Message
     
    Not sure if this is really a big deal or not though... the lawsuit settlement was tiny.

     

    I'm as big a bear as any- but this is tiny compared to the bigger issues of stagnant subs, intl losses, and streaming cashflow.
    14 Feb 2012, 02:30 AM Reply Like
  • Andrew Shapiro
    , contributor
    Comments (1882) | Send Message
     
    Netflix doesn't previously accrue or expense any amount for this litigation. Their earnings are touted on Jan 25th and VERY soon thereafter the litigation is settled with this figure. It didn't come out of thin air.

     

    The timing of this sizable earnings shift is quite suspicious and further damages management credibility and board accountability and oversight mechanisms.
    14 Feb 2012, 09:28 AM Reply Like
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