Netflix shares fall on profit warning
Movie rental firm will make a loss if it can't recover from Qwikster debacle
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Netflix shares dropped 5.4 per cent in New York trading yesterday after the movie rental firm announced it had raised $400m from existing investors, but warned that it might not do too well next year.
"If we do not reverse the negative consumer sentiment toward our brand, and if we continue to experience significant customer cancellations and a decline in subscriber additions, our results of operations including our cash flow will be adversely impacted," the firm said in a late filing relating to the stock sales.
The video-streaming and DVD rental service dropped itself in it this summer when it announced plans to split up its business and charge more for its packages. For reasons unknown, Netflix decided it would be a good idea to spin off the DVD part of its service into a separate company, which it planned to name Qwikster.
The wildly unpopular decision led to subscribers leaving the company in their droves and eventually the reversal of the split.
Netflix is now planning its entry to the UK and Europe next year in moves that it hopes can mark a change in its fortunes. To get that change going, it raised two lots of $200m by selling shares to long-time investors in the company: T Rowe Price Associates and Technology Crossover Ventures.
The market, however, was not impressed enough by the share sale to discount the warning about profits next year, and shares dropped 5.4 per cent to $70.45. They fell another 0.7 per cent, to $69.77 in early trading on Wednesday. ®
COMMENTS
Perhaps it is "broken" long term
But as the other poster indicated - the world isn't quite yet ready for online only. Being too far ahead of your own time is also a bad thing.
They simply bungled it completely. They made too many changes to quickly. Maybe lower the disc count and add more online time - sure.
Here's a clue
If it ain't broken, don't fix it.
Netflix fucked themselves and have no one to blame but themselves for their stupidity. They had a great service, even before they rolled out the online viewing. But greed and arrogance got the better of them and they screwed up. Sure, they fixed their screwup, but too late, they'd already shown they are more worried about the stockholders than their customers. So fuck 'em.
will be curious
I wonder if this will go down in the annuls of business history of another example of how to destroy your brand nearly over night ala Schlitz Beer in 70s or Perrier water in early 90s.

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