UPDATE 3-Netflix in surprise holiday-driven profit, shares jump 35 pct

Wed Jan 23, 2013 10:28pm EST
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* Netflix had warned of a Q4 loss

* But number of subscribers jumped in strong holiday season

* Fourth-quarter profit totals $8 mln

* Shares gain 35 percent in after-hours trading

By Lisa Richwine

Jan 23 (Reuters) - Netflix Inc surprised Wall Street on Wednesday with a quarterly profit after the video subscription service added nearly 4 million customers in the United States and abroad, sending its shares 35 percent higher in after-hours trading.

The dominant U.S. video rental and streaming company had warned three months ago a letter to investors that it was likely to see a loss for the October to December period, attributing it to startup costs for its expansion into Scandinavia.

But Netflix underestimated the impact of the busy holiday season, when sales of tablets, phones and Internet-connected TVs helped boost subscriptions even as the company faced competition from companies such as Hulu and Amazon.com Inc.

Netflix reported $8 million in net income for the fourth quarter, or 13 cents per share. Revenue rose 8 percent to $945 million from the same quarter a year earlier.   Continued...