Shares of Netflix (NFLX 0.50%) are trading off more than 16% after-hours as investors expressed disappointment in the company's third-quarter results , announced after the bell.
Financials weren't the problem. Netflix beat estimates on both the top and bottom lines:
|
Metrics |
Q3 2012 Estimate |
Q3 2012 Actual |
Q3 2011 |
Y-o-Y Growth Actual |
|---|---|---|---|---|
|
Earnings per share |
$0.04 |
$0.13 |
$1.16 |
(88.8%) |
|
Revenue |
$904.89 mil. |
$905.09 mil. |
$821.84 mil. |
10.2% |
Source: Yahoo! Finance .
So why the sell-off? Guidance. Netflix now says to expect no more than 27.1 million in total domestic streaming subscriptions , which would amount to a full-year gain of just 2 million in Q4 and 5.43 million for the full year. Earlier, Netflix had guided to 7 million new domestic streaming additions, a target I went on record as saying was perfectly achievable.
Over at AllThingsD, Peter Kafka posits that Reed Hastings' letter to shareholders implies that Amazon.com (AMZN +3.47%) is closing fast on Netflix.
"Our estimate is that viewing of Amazon Prime Instant Video has yet to pass that of Hulu," Hastings wrote, a shift from last quarter, when he remarked that neither Hulu nor Amazon was "gaining meaningful traction" in terms of share of streaming viewing hours.
The implication, Kafka argues, is that Amazon is making noticeable progress and will soon pass Hulu on its way to passing Netflix. Maybe. But before we go too far down this rabbit hole, it's worth noting what else Hastings said, principally:
Of our top 10 TV shows, six are only on Netflix, and not available on Hulu, Amazon Prime Instant Video, or HBO GO. The ratio is slightly higher for our top 50 TV shows. We have a very unique and compelling offering.
AMC Networks' (AMCX 3.31%) post-apocalyptic hit The Walking Dead is a good example. Netflix is also the only partner with streaming rights to the James Bond films -- though, to be fair, its selection is lacking compared with what you can rent at either Amazon or iTunes.
Yet there's no doubt Netflix is occupying more of our time. In the same quarter in which the Olympics ruled TV, 29 million viewers consumed more than 3 billion hours of content. Talk about a captive audience.
