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Netflix (NFLX) indicates in a letter to shareholder that it plans to raise capital as needed to...

Netflix (NFLX) indicates in a letter to shareholder that it plans to raise capital as needed to fund the cost of producing original programming. The company invests more than $2B a year on programming, a cost that looms as an impediment to profitability. (Netflix letter .pdf)
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  • DIgitalMediaView
    , contributor
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    Wait a minute...NFLX just reported what was billed as a wildly successful quarter where they blew past all consensus numbers, but their business model is so marginally profitable that new programming investments will require an outside infusion of capital? I guess that's what happens when you have $5.7B in existing content liabilities, $3.3B of which are off balance sheet. But that $5.7B (up from $4.8B a year ago) is 130% the size of all Netflix assets. I realize that math and fundamentals don't matter with NFLX but would someone with a finance background explain to me how this is sustainable? The company's finances seem to invoke the pun House of Cards every time someone looks at a spreadsheet for more than a minute (http://bit.ly/XZsnOE). How does NFLX avoid the Easter Island Effect (http://reut.rs/ZQYX1Y)?
    25 Apr 2013, 11:31 AM Reply Like
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