Los Angeles - Netflix reported slower growth than
analysts were predicting in the first quarter - held back by a dearth of big
releases like “House of Cards” that generate fresh subscriber signups at home
and abroad.
The world’s biggest paid video service signed 4.95
million new customers last quarter, less than the 5.49 million analysts were
expecting. The shortfall shows how dependent Netflix is on its breakout hits to
find new customers and keep existing ones. It’ll make up some of that in the
current period, with a forecast for viewer growth that beat analysts’
forecasts.
Netflix needs to add millions of subscribers every
quarter to help pay for the billions of dollars the company spends making TV
shows and movies or licensing programs from others. The company, which has
committed $15.3 billion for movies and TV shows over the next five years,
hasn’t given any indication it plans to slow those outlays and said Monday it
plans to raise money.
Shares of Netflix fell 2.3 percent to $143.80 in extended
trading after results were announced. They had risen 15 percent this year
through April 13.
Netflix could turn the tide in the second quarter,
typically one of its weakest. The company, based in Los Gatos, California, has
lined up a slew of high-profile releases in the coming months, including new
seasons of “House of Cards,” “Orange Is the New Black” and “Master of None.”
Netflix also plans to release three big-budget movies.
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The heavy second-quarter schedule comes with costs and
highlights a dilemma. Because of those expenses, Netflix said profit in the
period will be 15 cents a share, short of analysts’ estimate of 23 cents. The
first quarter, lighter on new releases, was the company’s most profitable ever
and the first time international operations made money.
Investors have permitted Netflix to operate near
break-even on the expectation that the company, which expects to top 100
million customers this week, will continue to grow rapidly, especially outside
the US. CEO Reed Hastings has also pledged to deliver material profits starting
this year. Analysts are forecasting net income of $477.2 million, or $1.09 a
share, on revenue of $11.2 billion, based on the average of estimates compiled
by Bloomberg.
The company said first-quarter profit soared to $178
million, or 40 cents a share, compared with analysts’ predictions of 37 cents.