Netflix in surprise holiday-driven profit, shares jump 35 pct
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Netflix Inc surprised Wall Street on Wednesday with a quarterly profit after the video subscription service added nearly 4 million customers in the United States and abroad, sending its shares 35 percent higher in after-hours trading.
The dominant US video rental and streaming company had warned three months ago a letter to investors that it was likely to see a loss for the October to December period, attributing it to startup costs for its expansion into Scandinavia.
ButNetflix in surprise holiday-driven profit, shares jump 35 pct when sales of tablets, phones and Internet-connected TVs helped boost subscriptions even as the company faced competition from companies such as Hulu and Amazon.com Inc.
Netflix reported $8 million in net income for the fourth quarter, or 13 cents per share. Revenue rose 8 percent to $945 million from the same quarter a year earlier.
"We just saw tremendous growth over the holidays," Netflix CEO Reed Hastings said in an interview.
The company also forecast it will add 1.7 million members in the first three months of 2013, though it predicts net income will be "relatively flat" due to declining DVD profits and higher global operating costs.
Shares of the company surged 35 percent to $139.80 in after-hours trading. They closed at $103.26, up nearly 6 percent before its earnings announcement.
"They did surprisingly well with subscriber growth and profitability," Lazard Capital Markets analyst Barton Crockett said. "It was a very good quarter."
Wall Street analysts on average had expected Netflix to report a quarterly loss of 13 cents per share, according to Thomson Reuters I/B/E/S. A year ago, Netflix had earnings of $41 million, or 73 cents per share, on revenue of $876 million.
Activist investor Carl Icahn, who holds an almost 10 percent stake in Netflix and who has said that he felt the company was an attractive takeover target, has seen the value of his shares increase by $445.3 million to $768.9 million since he started buying them in September.
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