Can a $400M cash infusion stop Netflix's bleeding, or is it too small a bandage?

After losing close to two-thirds of its market value since July, Netflix (Nasdaq: NFLX) has begun scrounging for cash, Monday announcing it had made a deal to sell $200 million of convertible senior notes to Technology Crossover Ventures in an agreement that also requires Netflix to raise another $200 million in stock sales; The Wall Street Journal said Netflix would sell common stock to mutual funds and accounts managed by T. Rowe Price, at a share price of about $70.

The company's stock, already struggling to a 52-week low of $74.47 Monday, plunged another 8 percent after hours when the deal was announced before recovering to $73 before the market opened.

TCV, a long-time shareholder, will charge no interest on the notes, but it can convert them to equity when Netflix shares hit $85.80. The notes mature in 2018.

Netflix CFO David Wells said the cash infusion would strengthen the company's balance sheet, and allow it to "remain focused on growing our streaming subscriptions and returning to global profitability after our launch in the U.K. in 2012." Its SEC filing says the cash would be used for "general corporate purposes, including working capital and capital expenditures."

Four hundred million dollars is quite a bandage, but is it really enough to stop the bleeding at Netflix?

After a summer of missteps--its ill-advised price hikes and its since-abandoned effort to split its DVD and streaming business--the company has seen its stock price plunge 75 percent and watched as 1 million subscribers have jumped ship. It says it expects subscriber losses to flatten this month and for growth to resume in December.

But its planned launch in the United Kingdom and Ireland in early 2012 is pushing up content costs--as it anticipated. The killer, of course, is the reduced income stream from the 1 million subscribers it has lost.

Amazon (Nasdaq: AMZN), which acquired LoveFilm for $317 million last January, also is likely to make the Battle of Britain costly to Netflix, as it already has a beachhead there and has been aggressively exploiting it.

Of course, the competition continues to nip at its heels in the U.S. as well, forcing Netflix to accelerate its content acquisition at ever-increasing costs. And, Netflix's library gets a lot thinner in March when it loses Starz content. Even though CEO Reed Hastings says that content "only" accounts for six percent of the company's viewing hours, there are likely to be more subscribers loses once access to those Disney and Sony Picture titles actually dries up, much as subscriber defection accelerated following the price hike in September. Consumers really don't like change, especially when it means they lose something in the process.

Netflix's recent addition of an Arrested Development revival not withstanding, there are likely to be more tough times ahead. Stop the bleeding? Unfortunately, no.--Jim