Tuesday, July 24, 2012

Netflix, Inc.(NASDAQ:NFLX) To Report Lower Report, Higher Revenue, Subscribers Count in Focus

Netflix, Inc.(NASDAQ:NFLX) is all set to report its second quarter earnings today after the market close with analysts are estimating the company to report a sharp decline in its earnings, while revenue is projected to grow by double digit.

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Average analysts forecast Netflix to report 5 cents a share of profit, well below from its year ago profit of $1.26. Revenue is projected to grow by 12.70% year over year to $888.90 million, from $788.61 million a year ago.  Investors would look for the company’s addition of subscribers during the quarter as well what the company’s say about its future subscribers target.

In the first quarter, the company had reported higher than estimated earnings and revenue and said DVD members declined to 10.1M in Q1; the company said domestic streaming members rose by 1.7M to 23.4M. The company has a goal of achieving 7M net subscriber additions in 2012.

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In the past, the company has beaten analysts’ estimates in all the four consecutive quarters. However, shares of the company had slump in September last year after the company reported a sharp decline in its subscribers triggered by the company’s decision to raise U.S. prices for video subscription services. Since then, the company failed to get back its lots glory and hence the stock made a new low of $60.70 in June.

Analyst Views

ITG Research says Netflix checks indicate domestic ARPU fell in Q2 as more subscribers traded down from higher priced plans. Barclays believes Netflix will report a gain of about 700,000 domestic streaming subscribers. Analysts and investors will listen for comments from the company on its Q3 forecast, whether it still plans to add 7M net subscribers this year and on its international expansion efforts.

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