Business, Economics and Jobs

Netflix shares fall 16% on subscriber growth worries


An Apple iPad is used to view Netflix during the Netflix UK launch in London, England on January 9, 2012.


Gareth Cattermole

The Olympic Games is not a money spinner for everyone in the television industry.

Shares in Netflix fell nearly 16 percent in after-hours trading today after the US-based subscription video company warned investors it could be tough to attract domestic viewers during the current quarter as the international sporting event fills television screens for two weeks of the 12 week period.

According to the Los Angeles Times, Netflix needs to attract close to 1.8 million “new streaming subscribers” in the United States in the next three months if it is to reach its full-year target of seven million additions by December 31. 

Netflix, which charges users a monthly fee to stream movies and TV shows, had nearly 24 million Internet video subscribers in the United States at the end of June, after adding 530,000 in the last quarter.

That brings its total additions for the year to 2.27 million, well short of its target.

Fewer people are likely to sign up to Netflix’s video streaming service if they are busy watching Olympic sporting events, the Associated Press said.

The warning overshadowed Netflix’s better-than-expected earnings for the second quarter, CNN Money reported.

The company earned $6.2 million, or 11 cents a share. While it was well short of the $68 million, or $1.26 a share, reported a year ago, it was much better than analysts’ expectations of four cents a share.

Revenue for the period rose 13 percent from last year to $889 million, matching forecasts.

Netflix has been doing it tough of late. It shed 61% of its market value in 2011 and lost more than 600,000 clients after raising the price of its streaming and DVD rental package. It has also been investing heavily in expanding its service around the world. It had 27.6 million Internet video subscribers at the end of June.

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