Oct. 20, 2014, 7:51 AM| 3 Comments
Oct. 17, 2014, 2:26 PM
- Moody's calls the decision by CBS (CBS +2.3%) to move forward with a streaming service another step forward in the "transformation" of content delivery.
- The ratings agency thinks the product will be attractive to millennials and cord nevers, but is undermined a bit by not including NFL broadcasts.
- In an interesting pullout, Moody's predicts the service won't have a material impact on subscriber demand for SVOD concerns such as Netflix (NFLX -2.2%), Hulu, and Amazon Prime (NASDAQ:AMZN).
- Moody's also point out that content providers will have the ability to set restrictions on content delivery in order to maximize revenue streams. Disney's (DIS +2.6%) ESPN comes to mind.
Oct. 17, 2014, 11:49 AM
- Mark Cuban on Twitter: "I'm buying NFLX stock. At half of YHOO, 10B<Twitter and small pct of major media companies, Someone will try to buy them."
- Netflix (NFLX -3.8%), which has a current market cap of $20.9B, ticked slightly higher on Cuban's remarks, but continues to sell off for the second day in a row after reporting soft Q3 subscriber adds.
- The outspoken Dallas Mavericks owner has plenty of industry experience: He once sold Broadcast.com to Yahoo for $5.7B, and now controls multiple studios and TV network AXS TV. He was less positive on Netflix back in 2010, predicting (not too accurately) the company would struggle to land deals for high-profile Hollywood content.
Oct. 16, 2014, 12:45 PM
Oct. 16, 2014, 9:13 AM
Oct. 16, 2014, 7:43 AM
- There's a widespread reset of expectations on Netflix (NASDAQ:NFLX) after the company delivers subscriber growth below guidance in Q3 and gets a reality check with HBO stepping into the streaming fray.
- Wedbush: Bearish-leaning analyst Michael Pachter take a victory lap over the sell-off, but also stays focused on the disparity between Netflix's net income and free cash flow. There's $448M over 9 quarters that needs to be sorted out, says Pachter.
- RBC: The long-term thesis on the streaming concern is still intact. PT clipped to $550.
- Piper Jaffray: The "priced for perfection" stock sees its price target reduced to $345 by analyst Michael Olson. Estimates on FY14 and FY EPS are chopped lower.
- Goldman Sachs: NFLX is still a Buy as the investment firm stays focused on revenue growth - instead of the subscriber guidance miss.
- Citigroup: The price target on Netflix is lowered to $365 due to a new set of expectations on growth and competition.
- NFLX earnings coverage: top and bottom lines, earnings report highlights, comments on HBO, conference call breakdown.
- NFLX -25.3% premarket to $335.15.
Oct. 15, 2014, 7:22 PM
- "Our per-member viewing and retention in the US are as strong as ever," Netflix (NASDAQ:NFLX) declared in its Q3 shareholder letter (.pdf), rejecting the view that competition had much to do with its light Q3 subscriber adds. Rather, blame is largely placed on price hikes for new subs.
- Were U.S. penetration rates also a factor? With 37.2M U.S. subs at the end of Q3, Netflix is now used by nearly 1/3 of American households, not counting those getting free access via account-sharing.
- On the earnings Q&A (video), management defended Netflix's aggressive international spending, noting (among other things) the additional scale provided by foreign markets makes it easier to finance big content deals. The company also highlighted Adam Sandler's international appeal, and that of Netflix's original content.
- International markets that launched before 2014 are now "collectively profitable on a contribution basis." However, 2015 margins will be dinged by a higher VAT rate going into effect in January - Netflix expects a 5% European impact on average.
- Q3 U.S. streaming contribution margin was 28.6%, and international margin -8.9%. In Q4, those numbers are expected to drop to 28.4% and -24.5%.
- Other details: 1) Content obligations rose by $1.2B Q/Q to $8.9B. 2) Free cash flow is expected to continue trailing EPS in the coming years due to content spend. 3) The DVD sub base fell by 300K to 6M.
- NFLX -25.8% AH. Q3 results, details.
Oct. 15, 2014, 5:37 PM
Oct. 15, 2014, 4:26 PM
- Netflix (NASDAQ:NFLX) issues a statement on the move by Time Warner to offer HBO as a stand-alone service
- The company spins the move as inevitable and sensible, while predicting both streaming services will prosper as consumers move to Internet TV.
- CEO Reed Hastings has a long history of complimenting HBO, but he will be as eager as anyone to get a better view of how the new HBO streaming product will be marketed and priced.
- Shares of NFLX are down 23.4% in AH trading to $344.10 after Q3 results.
Oct. 15, 2014, 4:08 PM
- Netflix (NASDAQ:NFLX) reports its added 3.02M subscribers in Q3 vs. guidance of 3.69M and a recent history of 1.69M (Q2), 4.0M (Q1), 4.07M (Q4 2013), and 2.73M (Q3 2013) over the preceding 4 quarters.
- The company cites higher subscription prices as a factor in its sub guidance miss.
- Total subscribers rose to 53.06M by the end of the period.
- Total contribution margin ended up at 18.0%, down 50 bps Q/Q.
- U.S. contribution margin +500 bps to 28.6%.
- Q4 sub guidance: 4.00M net additions are expected - 1.85M domestic and 2.15M international.
- NFLX shareholder letter (.pdf)
- NFLX -18.9% AH.
Oct. 15, 2014, 4:06 PM
Oct. 15, 2014, 12:05 PM
- The latest big revelation from Time Warner (NYSE:TWX) at its engaging Investor Meeting presentation is that licensed rights to Friends will go to Netflix (NFLX -2.9%) for streaming in the U.S. and Canada.
- All 10 seasons of the hit show will be available on Netflix beginning on January 1.
- Warner Bros. Television has been raking in network licensing fees on Friends since the last episode aired in 2004.
- Previous: HBO to go stand-alone
Oct. 15, 2014, 11:32 AM
- Netflix (NFLX -2.6%) slid a little lower after Time Warner announced HBO would become a stand-alone service sometime in 2015.
- Though it isn't clear how much of HBO's programming will migrate over to the OTT product, the mention of the "international possibilities" of a streaming HBO is enough to catch the attention of Netflix watchers.
- The development also has implications for Hulu (DIS, CMCSA, FOXA) and Amazon (AMZN -1%) which could end us as delivery partners or direct streaming rivals, according to Re/code.
- Pay-TV operators (CHTR, CVC, DISH, DTV) are in a bit of a box by the plan and may choose to play hardball with HBO.
Oct. 14, 2014, 5:35 PM
Oct. 14, 2014, 8:05 AM
- Netflix (NASDAQ:NFLX) Chief Content Officer Ted Sarandos was the keynote speaker at the MIPCOM Media Mastermind conference today in France.
- Though the exec didn't confirm Netflix has any plans in place yet for Japan, he says an entry by the company in Japan would make a very interesting scale play.
- On the new markets of France and Germany: Sarandos says Orange is the New Black is very popular and expects content to double in the regions over the next year.
- On the backlash from the IMAX deal: "I don’t want to kill windowing, I want to restore choice and options."
- Expect the first Netflix-Adam Sandler movie to debut in late 2015.
- Netflix announces Q3 earnings results tomorrow.
Oct. 13, 2014, 4:34 PM
- 13 months after downgrading Netflix (NASDAQ:NFLX) to Neutral, BTIG's Rich Greenfield is upgrading to Buy and setting a lofty $600 target. Moreover, he expects the company to have 100M subs globally by 2017; Netflix had 50M streaming subs at the end of Q2 (36.2M U.S., 13.8M international).
- However, Greenfield expects the heavy content and marketing spend needed to drive this growth to pressure near-term earnings: His 2015 EPS estimate of $4.05 is well below a $6.45 consensus.
- The $600 target is based on an aggressive multiple of 24x estimated 2016 EBITDA, discounted by 15%.
- NFLX +0.6% AH.
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Netflix Inc operates as an Internet television network providing TV shows & movies which include original series, documentaries & feature films. The Company has three segments namely Domestic streaming, International streaming & Domestic DVD.
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