Netflix has good hand with "House of Cards", shares soar 24 percent

Tue Apr 23, 2013 12:46am EDT
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By Lisa Richwine

(Reuters) - Netflix Inc impressed investors with solid subscriber growth and better-than-expected profits in the first quarter, sending shares of the video subscription service soaring 24 percent higher in after-hours trade.

A big push into original shows, a strategy aimed at hooking new customers with content they can't get anywhere else, seems to be working, with its February release of the series "House of Cards", a drama starring Kevin Spacey, generating plenty of buzz.

It was the second quarter in a row that Netflix has surprised on the upside, and its shares have become one of Wall Street's hottest performers this year, rising more than 80 percent. On Monday, its shares climbed to $216.62 in after-hours trade after closing at $174.37 on Nasdaq.

The results could help alleviate some analysts' concerns that Netflix may not grow fast enough to pay the costs of its international expansion and its bills from Walt Disney Co, Time Warner Inc's Warner Bros, CBS Corp and other Hollywood studios that provide it with movies and TV shows to stream to subscribers over the Internet.

The Los Gatos, California-based company beat Wall Street analysts' forecasts with $19 million in net income, excluding a loss for retiring debt, and adjusted earnings per share of 31 cents. Analysts had forecast an average of 19 cents per share, according to Thomson Reuters I/B/E/S.

Revenue for the quarter was $1.0 billion, up 17 percent from a year earlier.

Netflix said it signed up 2 million new customers for its $8-a-month U.S. streaming service, the largest part of its business, with a total of 29.2 million members.

"The launch of 'House of Cards' provided a halo effect on our entire service," Netflix Chief Executive Officer Reed Hastings and Chief Financial Officer David Wells said in a letter to shareholders.   Continued...

A Netflix return CD mail envelope is shown in Encinitas, California, April 19,2013. Netflix Inc reported on April 22, 2013 a first-quarter profit that beat Wall Street expectations as the dominant video rental service added new streaming subscribers in the United States. Netflix shares soared to $207.39 in after-hours trading, rising 19 percent from a close of $174.37 on Nasdaq. For January through March, Netflix recorded $19 million in net income, excluding a loss for retiring debt, and adjusted earnings per share of 31 cents. Picture taken April 19, 2013. REUTERS/Mike Blake