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Netflix Expects Loss for Full 2012

21 Nov, 2011 By: Erik Gruenwedel

Netflix Nov. 21 said it expects to generate a net loss for the full calendar year 2012 — a downward revision from the company’s Oct. 24 earnings call, according to a S-3 filing.

Los Gatos. Calif.-based Netflix had previously stated that it expected to post-quarterly losses during the first few quarters of 2012 as it rolled out streaming service in the United Kingdom and Ireland.

Now due to projected flat consolidated revenue and costs associated with international expansion of its streaming service, Netflix expects a cosolidated net loss for the entire 2012, according to Ralph Schackart, analyst with William Blair & Co. in Chicago, who disclosed the loss in a note.

Netflix also stated that the decline in gross disc subscribers has abated and that gross streaming subscriber growth continues, including strong projections in December.

Separately, Netflix announced it expects to raise $400 million through the sale of 2.86 million shares of common stock ($200 million) and private placement of convertible notes ($200 million in bonds) with a venture capital firm.

“With this additional capital from two long‐term oriented investors, we have strengthened our balance sheet and remain focused on growing our streaming subscriptions and returning to global profitability after our launch of the U.K. in 2012,” CFO David Wells said in a statement.

Schackart lowered his Netflix earnings per share estimate from 28 cents to a loss of 2 cents per share.

“Based off management’s commentary, we are increasing our estimates for subscription and technology and development costs for fiscal 2012,” Schackart wrote in a note. “We are not making any changes to our revenue estimates.”

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