Netflix down 17% in after hours trading as recovery disappoints

Netflix (Nasdaq: NFLX) shares were down nearly 17 percent in after hours trading following earnings news that failed to impress Wall Street Monday, leaving the once-high flying company licking its wounds yet again, and the stock price hovering near $85, down a whopping $219 since July, when it reached $304.79.

Netflix reported it had added 1.7 million streaming subscribers in the U.S., bringing its total subscriber number to 24.4 million. The adds brought it almost back to its all-time high of 24.6 million in 2Q2011. But a projected slowdown of subscriber growth, to as few as 200,000 new additions, in the second quarter worried investors.

"They're adding a lot of subscribers, but they're also losing a lot of subscribers," said Barton Crockett, an analyst at Lazard Capital Markets. "So it makes it very hard to predict."

Netflix said it lost $4.6 million in the quarter, or 8 cents a share, on improved revenue of $869.8 million; a year ago it posted a profit of $60.2 million, or $1.11 a share, on revenue of $718.6 million. It was the first quarterly loss for Netflix in seven years, and far less than the 27 cents per share analysts had predicted.

In a bit of a surprise, the company now says it may return to profitability as early as the second quarter, reversing guidance it gave last quarter that it expected to lose money through all of 2012. It also said it would open for business in yet another country in the fourth quarter,  move that had been expected to come in 2013.

Netflix expanded to 43 countries in the Caribbean and Latin America, as well as the United Kingdom and Ireland last year.

But the company faces a raft of competition in the U.S., its biggest market. Hulu, Amazon (Nasdaq: AMZN), Vudu, and others have begun to attract their own fans.

During a conference call, Netflix CEO Reed Hastings implored investors to look at the bigger picture, forecasting as many as 7 million new subscribers in the U.S. alone by the end of the year.

"Everyone is realizing that consumers want 'click and watch' on-demand" video, Hastings said. "We have been focused on this market for a very long time and have some substantial advantages because of that."

But, for the moment, Wall Street isn't allowing Netflix any wiggle room.

For more:           
- listen to the earning call
- see this Wall Street Journal article

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