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A Fool Looks Back

By Rick Aristotle Munarriz | More Articles
January 28, 2012 | Comments (2)

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Netflix (Nasdaq: NFLX  ) wasn't out of favor for long.

Despite a rocky second half of 2011 that found shares of the video service plummeting and CEO Reed Hastings on the short list of many "Worst CEO of 2011" articles, Netflix came through with the kind of bounce-back quarter that it needed to get Wall Street and couch potatoes believing again.

Sure, DVD-based subscribers continue to leave in droves. Hastings expects that trend to continue until there's just one subscriber left with a copy of Marley & Me. However, Netflix's streaming accounts -- both domestically and internationally -- did pop higher sequentially.

Netflix now has a record 26.2 million customers worldwide. It was easy to laugh at Netflix during its incessant fumbling last year. Now that the shares have soared 67% this month through Thursday's close -- making it the hottest component of the S&P 500 in 2012 -- Hastings is the one getting the last laugh.

Briefly in the news
And now let's take a quick look at some of the other stories that shaped our week.

  • Apple (Nasdaq: AAPL  ) is back to blowing past the prognosticators. The world's most valuable tech company had a monster quarter. When you sell 37 million iPhones, you don't need to ask Siri -- the iPhone 4S voice-recognition assistant -- what will happen to the stock.
  • Howard Stern revealed this week that there's a "99.9%" chance that he will leave radio after his contract with Sirius XM Radio (Nasdaq: SIRI  ) runs out at the end of 2015.
  • Shares of Travelzoo (Nasdaq: TZOO  ) took a hit after posting weaker-than-expected revenue growth of 23% in its latest quarter. Earnings soared by a better-than-projected 70% for the travel-deals publisher, but that was largely the byproduct of having a much lower effective tax rate. I guess accountants love to travel, too.

Until next week, I remain,

Rick Munarriz

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The Motley Fool owns shares of Apple. Motley Fool newsletter services have recommended buying shares of Travelzoo, Netflix, and Apple and creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Longtime Fool contributor Rick Munarriz calls them as he sees them. He owns shares of Netflix and Travelzoo and is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Motley Fool has a disclosure policy.


Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 28, 2012, at 8:43 AM, JamesG99 wrote:

    Rick,

    Thanks for the update.

    As for the AAPL not all companies were surprised by the Q1 results.

    I Know First system signaled on smart money inflow to AAPL on January 22,

    AAPL has been upgraded to Zacks rank 1, the Zacks top rank. It is very rare for very large caps to get that rank.

    Good Luck to all of US!

  • Report this Comment On January 28, 2012, at 2:24 PM, aacole wrote:

    Re: Netflix

    How is the cost model for Netflix streaming going to affected once ISPs start charging for the Gigabit dataflows that video requires? It will make the DVD service a less costly alternative (overall) for the customer.

    The Netflix business model assumes that the cost of the streaming burden on the internet are to be borne by someone else.... either the ISPs or the customers or both.

    And if no one ends up paying extra for that extra burden on the data backbone (from the streaming in aggregate), I believe that the quality of the Netflix streaming service will suffer. After all, where is the incentive to install all the necessary extra capacity for no incremental higher return? Perhaps the streaming demand could effect the quality of internet connectivity as a whole.

    We'll have to see what happens, but as the old saying goes, "there is no such thing as a free lunch."

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2/22/2012 4:00 PM
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