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Netflix posts 84% jump in earnings, lifts forecast

October 24, 2006|From Reuters

Netflix Inc. on Monday reported that its third-quarter profit soared 84%, more than expected, and the leading online DVD rental company sharply raised its fourth-quarter earnings forecast, sending its shares up more than 13% in after-hours trading.

Net income was $12.8 million, or 18 cents a share, in the third quarter, compared with $6.95 million, or 11 cents, a year earlier, the company said. Sales jumped 48% to $256 million, and Netflix said its subscriber base grew 9.5% to 5.7 million.

Analysts polled by Reuters Estimates had expected Netflix to post a profit of 12 cents a share on revenue of $250.6 million.

The company forecast fourth-quarter net income of $7.5 million to $13.5 million, up from a previous forecast of $3.8 million to $8.8 million.

Netflix said it expected fourth-quarter revenue of $273 million to $278 million, up from a previous range of $267 million to $272 million. The Los Gatos, Calif.-based company also said it would have at least 6.3 million subscribers at the end of the year.

For 2006, the company saw net income of $41.7 million to $47.7 million, up from $30 million to $35 million, and revenue of $992.4 million to $997.4 million, up from at least $980 million.

Subscriber acquisition costs rose sharply to $45.32 per subscriber for the quarter over last year's $36.33.

Churn, or subscriber cancellations, dropped slightly to 4.2% from 4.3% in the third quarter of 2005.

Shares of Netflix closed up 84 cents at $23.08 and rose $3.11 to $26.19 in late trading after the report.

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