Netflix Loses 810,000 Subscribers in Q3 (NFLX)

Netflix Inc. (NASDAQ: NFLX), after market close today, released its results for the third quarter of 2011. The Los Gatos, California-based company, which has had a tough last few months, reported a higher than expected loss in subscribers in the third quarter of 2011, sparking a huge sell-off in its shares in after-hours trading.

Netflix shares are down more than 27% in after hours trading. The stock has already fallen more than 57% in the last three months.

The problems for Netflix began after the company announced in July that it will hike subscription rates by 60%. The hike in subscription rates, which was implemented in September, resulted in a number of customers cancelling their subscriptions with the company. The company was expecting loss of subscribers; however, the loss was far worse than anticipated.

During the third quarter, Netflix lost 810,000 subscribers. The company’s subscriber base fell from 24.60 million at the end of the second quarter to 23.79 million at the end of the third quarter. The company was expected to end the third quarter, with a subscriber base of 24 million.

Netflix also cautioned investors about the fourth quarter, saying subscribers have fled more quickly than expected and its profit and revenue will also be lower than expected.

In a statement released along side the third-quarter earnings, Netflix’s CEO Reed Hastings and CFO David Wells said that the last few months have been difficult for shareholders, employees and most unfortunately, for many members of the company. They acknowledged in the statement that it has hurt its hard-earned reputation and stalled its growth in the U.S. However, they added that the company’s long-term streaming opportunity is as compelling as ever and it is moving forward as quickly as it can to repair its reputation and return to growth.

For the third quarter of 2011, Netflix reported earnings of $62 million, or $1.16 per share, compared with a profit of $38 million, or $0.70 per share reported for the same period in the previous year. The company’s third-quarter revenue rose 49% to $822 million.

Post Written By: Ed Liston Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.