Netflix Posts Profit of 21 Cents a Share, Beating Expectations

Online DVD rental company Netflix reported lower quarterly
net profit but still handily beat Wall Street expectations, sending its shares up more than 9% in after-hours trade.

Netflix posted net earnings of $14.9 million or 21 cents a share, compared with $38.2 million or 57 cents a share, in last year's fourth quarter, when it recognized a 45-cent-per-share tax benefit.

Revenue rose 44% to $277.2 million from $193 million in 2005's fourth quarter.

Analysts, on average, had expected net earnings of 15 cents a share and revenue of $277.2 million, according to Thomson Financial.

Netflix said its subscriber base grew 51% year over year to 6.3 million during the quarter. The company had predicted it would reach at least 6.3 million subscribers by the end of 2006.

In the latest period, the company came under an intensified attack from rival Blockbuster . Blockbuster launched a "Total Access" program that lets subscribers rent DVDs online, then return them to stores to get a free additional rental.

To combat this promotion, Netflix stepped up advertising of its $5.99-per-month plan, which lets subscribers keep one movie at home at a time. On Monday, the Los Gatos, Calif., company reduced the cost of that plan to $4.99 a month.

Netflix also recently unveiled a new feature that will allow users to immediately watch movies and television series on their personal computers.

This step may help the company compete against the growing movie download business, which includes players such as Amazon.com and Apple.

Contact U.S. News


    Get the best of CNBC in your inbox

    › Learn More*

Don't Miss

U.S. Video

  • CNBC's Tyler Mathisen looks back at the week's top business and financial stories. The markets were closed for Thanksgiving, but did manage to hit new highs. Low oil prices gave consumers more money to spend for Black Friday.

  • Cyber Monday deals on Walmart's website on Dec. 2, 2013.

    CNBC's Tyler Mathisen looks ahead to what are likely to be next week's top stories. The jobs report comes out this week, as do auto sales. And the Rockefeller Center Christmas tree is lit.

  • Following last week's wild energy ride, analysts expect oil prices to continue to drop during the holiday season. CNBC's Patti Domm reports.