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Netflix Inc. (NFLX) operates as an Internet subscription service company that provides subscription service streaming movies and television episodes over the Internet. It majorly operates in three segments Domestic streaming, International streaming and Domestic DVD. The company reported its third quarter earnings on the October 15, and the results were not very impressive. The stock market also reacted to the announcement and resulted in about 20% drop in stock price in after-hours trading. So, why the third was quarter such a disappointing one that nearly sank Netflix in the stock market. Lets get into the quarter details to derive the answer.
A quick look at the number mix
Revenue stood at $1.41 billion, a 27.4% increase from that of last years similar quarter. The revenue was up 5.1% from that posted in the second quarter of the fiscal year. 25% of the revenue was earned through international sources, and the revenue generated through domestic sources went by 25.1% as compared to last years third quarter.
However, the revenue generated from the domestic DVD business line saw a dip of 16% on a year-over-year basis.
The contribution profit improved by 400 basis points, mainly due to the 50.7% increase in contribution profit from domestic sources. Net income also saw a lift from $32 million reported in third quarter of 2013 to $59.3 million in the same quarter of 2014. In terms of earnings, this translated to around $0.96 per share in the quarter.
Analysts were expecting earnings of $0.91 per share on revenue of $1.41 billion, and the top and bottom line met their expectations.
But there were certain signs which could move the earnings to the red, if not taken care of. Also, the guidance for the fourth quarter is dim from the management end. And there is competition coming up as well. Lets get to these points in the upcoming section.
The decline in subscriber additions
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The Key Takeaway From Netflix's Third Quarter
LOS ANGELES-
"Twin Peaks," the ABC series that was a forerunner of today's offbeat serialized cable dramas, is coming back to life with nine new episodes to air on Showtime in 2016.
Series creators David Lynch and Mark Frost are working away on the scripts, with Lynch planning to direct all nine episodes. The episodes are expected to bow in early 2016, which would coincide with the 25th anniversary of the show's demise after two seasons on ABC in 1990 and 1991.
The new segs will be set in the present day and continue storylines established in the second season. Frost emphasized that the new episodes will not be a remake or reboot but will reflect the passage of time since viewers last checked in with key characters. As part of the deal, Showtime will rerun episodes from the original series' first two seasons leading up to the 2016 premiere.
Frost would not elaborate on plot details or even the characters that will come into play. But the story threads that will picked up were "baked in to the last episode," Frost told Variety. He called it "the next chapter of the story" and said that the passage of 25 years will be an important element in the plot.
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"For those followers of the show who felt bereft when the show ended where it did all those years ago are going to like where it goes from here," Frost assured. "And we hope that a lot of people who haven't been to Twin Peaks yet are going to be equally interested in where the story goes from where we left off."
"Twin Peaks" was ahead of its time in its unusual, often surreal approach to telling the yarn of a murder mystery in a fictional small town in Washington state. The show bowed with a ton of buzz -- Lynch was red-hot as a feature helmer at the time -- but it had little in the way of a sustained audience by broadcast TV standards of the day.
The series has remained a cult favorite over the years and thus was a ripe candidate for revival amid the general mania in the TV biz for reinventing vintage film and TV titles.
Lynch and Frost have retained ownership of "Twin Peaks" all these years. CBS has distribution rights to the show through the deficit-financing pact that Lynch/Frost Prods. set back in the day with Aaron Spelling's Worldvision distribution arm, which CBS now controls.
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'Twin Peaks' revival to air in 2016
