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Netflix 3Q profit rises 30 pct as economy darkens (AP)
SAN FRANCISCO - Netflix Inc.'s third-quarter profit surged 30 percent despite slowing subscriber growth, which is turning into a bigger problem for the online DVD rental leader as the rapidly unraveling economy prods more consumers to clamp down on entertainment expenses.
To help boost its revenue, the Los Gatos, Calif.-based company said Monday that it will begin charging about 500,000 subscribers $1 more per month to rent high-definition DVDs made for Blu-ray players. The surcharge becomes effective Nov. 5.
As the prices of Blu-ray players continue to fall, Netflix is betting more of its subscribers will buy the high-definition gadgets — and looking for more opportunities to raise rates as the rental service braces for the second recession since its inception a decade ago.
Netflix earned $20.4 million, or 33 cents per share, for the three months ending in September, compared with $15.7 million, or 23 cents per share, in the year-earlier period.
Revenue rose 16 percent to $341 million, from $294 million last year.
Analysts polled by Thomson Reuters had projected a profit of 31 cents per share on revenue of nearly $343 million.
Netflix ended the period with 8.67 million subscribers, falling below the goals that management established in July when executives forecast the rental service might enter October with 8.8 million. The company had warned two weeks ago it misgauged its subscriber growth.
In a sign that the faltering economy is prompting more households to cut corners, Netflix lowered its target for new subscribers for the second time this month. The company said it now hopes to have somewhere between 8.85 million and 9.15 million customers entering 2009 — down by 100,000 from its Oct. 6 forecast.
Just three months ago, Netflix had hoped to end 2008 with a many as 9.7 million subscribers.