Netflix Inc.'s (NFLX) second-quarter earnings plummeted 91% as the online movie rental company posted higher subscription costs, though subscriber rolls kept improving. The company, which provides streaming movies over the Internet as well as DVDs by mail, forecast a third-quarter bottom-line between a loss of 10 cents and a profit of 14 cents a share. Analysts surveyed by Thomson Reuters projected income of 11 cents. Shares sank 13% to $69.90 after hours as the company also reported subscriber rolls in-line with its guidance, but below some analysts' expectations. As of Tuesday's close, shares were down 71% over the past 12 months. Netflix added 530,000 U.S. subscribers to its online video service from the previous quarter, bringing the total to 23.9 million. Customers who rent DVDs totaled 9.2 million, down 8.4% sequentially. It had 3.6 million subscribers in its international business, up 18%. The company in April estimated a total of 23.6 million to 24.2 million online-video subscribers in the U.S. in the second quarter. It predicted 3.5 million to 4 million international subscribers. Raymond James was looking for 24.1 million in the U.S. and 3.87 million internationally. Netflix's customer base has rebounded--though at times below what Wall Street was looking for--following its 60% price hike last year on a popular subscription and a since-aborted plan to spin off its DVD-rental service into a separate business called Qwikster. Its stock, which took a beating amid the management missteps, has stabilized after last year's freefall, though remains well below its all-time highs from 2011. The company last year warned it would post losses in 2012 because of the cost of expanding into the U.K. and Ireland. The company has also invested in new initiatives like exclusive rights to air new episodes of TV shows such as "Arrested Development." For the latest quarter, Netflix posted a profit of $6.2 million, or 11 cents a share, down from $68.2 million, or $1.26 a share, a year earlier. The company in April predicted a bottom-line between a loss 10 cents and a profit of 14 cents. Revenue grew 13% to $889.2 million. Analysts expected $889 million. Gross margin narrowed to 27.6% from 37.9%, as subscription costs rose 36%. Netflix forecast a total of 24.9 million to 25.7 million U.S. streaming subscribers in the third quarter, and 3.9 million to 4.4 million international customers. Write to Ben Fox Rubin at ben.rubin@dowjones.com Subscribe to WSJ: http://online.wsj.com?mod=djnwires
