Netflix Inc. is scheduled to report its financial results for
the fourth quarter after the market closes Tuesday. Here's what you
need to know.
--EARNINGS FORECAST:Profit of 45 cents a share is the median of
estimates compiled by Thomson Reuters, compared to 79 cents a share
in the year-ago quarter.
--REVENUE FORECAST:Wall Street analysts expect revenue of $1.49
billion, up from $1.18 billion.
--SHARE PRICE:Netflix shares are up 3.8% from a year ago,
trading recently at $342.65, but the stock can be volatile and has
traded between $299.50 and $489.29 over the past year. After its
last earnings report, the company's stock fell 19% amid concerns
about slowing subscriber growth. WHAT TO WATCH
--DOMESTIC SUBSCRIBERS:A key metric for Netflix will be whether
its number of paid domestic subscriber additions in the fourth
quarter will be above or below the company's guidance of 1.35
million. Overall, the company is projecting 1.85 million domestic
streaming additions. "Another miss in domestic subs would elevate
concern on saturation," MKM Partners analyst Rob Sanderson says.
Netflix reported a disappointing number of new streaming
subscribers in the third quarter, raising worries about the
company's growth rate.
--OVERSEAS EXPANSION:Overseas subscriber growth is expected to
continue to outpace its domestic business. Cantor Fitzgerald
analyst Youssef Squali says, "International growth should be driven
by the expansion into France, Germany, and Benelux (September), the
Netherlands (launched in late "13), and continued progress in the
Nordics (launched in October "12), as well as further progress in
Latin America (2011)." Still, Netflix has struggled at times
overseas, other analysts have said, and expectations may be too
high.
--ORIGINAL PROGRAMMING:Netflix is scheduled to launch 20
originals this year, twice the number in 2013 and 2014, according
to Cowen & Co. analyst John Blackledge. "The increasing
velocity of originals brings with it higher usage and a stickier
service," the analyst says. However, more original programming also
increases the company's costs, which could pressure margins,
especially if subscriber growth slows.
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