Netflix Q4 results

Netflix announced their fourth quarter results, disclosing a 36% increase in profits, and a 31% increase in subscriber base (now over 12 Million) and saw a positive market response of a 13.24% increase in their stock price.

Some more banckruptcy predictions

In this article in Seeking Alpha, Rick Newman highlights 15 companies that he thinks will not survive 2009. Given how much we have analyzed Blockbuster, are we surprised that it makes the list?

In our financial ratio analysis of Blockbuster it may be well worth our time to estimate some of the default probabilities. Perhaps this would be a good time to try out your eVal software and take a closer look at BBI's numbers?

Valuing Netflix earnings and growth

At the time of this post, the market was valuing Netflix at $37 per share, one year ago the share price was $26.89. The raw return for the stock over the past year was( ($37-26.89)/26.89) = 37.6%

One question to ask was how did Netflix beat the expectations set at the end of last year...?

One interesting article that discusses some of these expectations (at the time) is the article "Netflix looks like a bargain again" written about a year ago, along with expectations about 2008 written in the companion piece "Netflix 2008 Outlook" where the author discusses expected growth rates in subscriptions.

What do you believe the Outlook for 2009 will look like?

Netflix profit up 45%

Read more about this here.

bricks and mortar

In his article "Why Blockbuster brick and mortars will be gone in five years" Don Reisinger points out the failings of Blockbuster.

If we applied Altman's Z-score to the last few years of Blockbuster's results, do we see a trend? from the points raised in the above article, what do you think is the most devastating failing of blockbuster in terms of value generation?

Netflix Conference Call

The conference call will be held on Monday the 26th at 3pm Mountain Time, more information at PRNewswire.

Instant Netflix II

So I signed up for Netflix and bought the fancy new LG BD300 Blu-ray player that allows for Netflix streaming content to be played... similar to the feelings of the author of this article, I was a little underwhelmed by the quality of the picture and sound delived by my fancy little network DVD player...

Regardless, an interesting point is raised by the author, he feels that streaming content was meant to see the demise and eventual end of the DVD. In our case, we focus our comparisons between Netflix and Blockbuster, with Blockbuster a clear second in the agility stakes. In the instant market, though, there are some more players, Vudu, Playstation 3 and Apple TV all have a hand in the market.

What are Netflix's advantages in the instant market? Their disadvantages?

Getting more information

I wanted to quickly outline how to get files from EDGAR (Electronic Data Gathering, Analysis and Retrieval System). The first step is to look-up your firm's CIK (Central Index Key) which is used by the SEC to index the filings of each individual firm. Go here and type in your company's name, such as "Netflix" the search engine will come back with potential matches, in Netflix's case there where two possible choices (but both had the same CIK suggesting it was the same company).

Now after you click on your company, EDGAR will provide you with a list of forms that have been lodged with the SEC, they are dated and the form type is also displayed. If we go to the section "Form-type" we can tell EDGAR to limit the forms by a certain type. For example, I want to find Netflix's churn metric in their most recent 10-Q, so I tell EDGAR to only to return Form type "10-Q" and then I click on the first filing.

After getting the filing (in html format), I scoll down to the management discussion and analysis section and find the churn metric at 4.2%. Note the management define churn:
Churn: Churn is a monthly measure defined as customer cancellations in the quarter divided by the sum of beginning subscribers and gross subscriber additions, then divided by three months. Management reviews this metric to evaluate whether we are retaining our existing subscribers in accordance with our business plans.

Instant Netflix

Apparently it's just like adding water to instant rolled oats, except instead of water you want an X-box360 with a Live membership (and you can avoid the step with the stove). Put simply, this new method of access to media allows for the consumer to watch their Netflix movies on the same screen they enjoy their X-box experience. See the BusinessWeek story here.

Does this line of business potentially increase Netflix's sources of competitive advantage relative to competitors?

What is blockbuster retaliating with, you ask... find out here.

Does this change your evaluation of the sustainability of this potential source of competitive advantage?

As an aside, any thoughts why X-box 360 outsold the Sony PS3 3-to-1 on Black Friday, and X-box was up 25% from last year's sales?