Netflix Third Quarter Earnings Results-2011

Netflix Third Quarter Earnings Results - 2011
Customer Inserts His/Her Name
Customer Inserts Grade Course
Customer Inserts Tutor`s Name
28 October 2011
Netflix Third Quarter Earnings Results - 2011
The following report is regarding the earning results of the third quarter of the year 2011 of Netflix. The report contains a comparison of the estimates presented in the earnings report of second quarter and the actual earnings as disclosed in the earnings report of the third quarter. There are a number of figures that are estimated for the next quarter including the number of subscriptions, total revenue from domestic activities, operating income of the company, total revenue from international activities and the operating income of the company from international activities. The report also includes a summary of the earnings call conducted on 24 October 2011.
Comparison of the Estimated and Actual Third Quarter Results
According to the guidance outlook for the third quarter presented in the earnings result of the second quarter, total subscribers from the U.S. would be between 24.6 million to 25.4 million. However, according to the actual results presented in the earnings result for the third quarter, the total subscribers from the U.S. are 23.79 million which is significantly less than the number of subscribers estimated for the third quarter in the earnings report for the second quarter. Thus, in case of total subscribers, it can be said that the company under-promised the figure as it was not within the range estimated but it was lower than the estimated figures. The reasons behind this fall in the number of total subscribers is said to be the rise in prices. Due to the rise in prices, users cancel their subscriptions (Shareholder.com).
The total revenue for the third quarter was estimated to be between $780 million and $805 million and the actual revenue for the third quarter is $799 million which is within the estimated figures as presented in the earnings report for the second quarter. In this case it can be said that the company did not under-promise or over-promise the figures as the revenue for the third quarter was estimated reasonably.
The operating income of the company from domestic users was estimated to be between $95 million and $120 million and the actual operating income for the third quarter is $120 million. The actual operating income is equal to the upper limit of the estimated range thus it can be said that the company did not over-deliver and the operating income was within the range estimated in the earnings report for the second quarter.
From international activities, the number of subscribers was estimated to be between 1,150k and 1,450k, and the actual number of international subscribers in the third quarter was 1,480k which is higher than the number of subscribers estimated by the company. The actual number of international subscribers is more than the upper limit of the estimated range...