INSUBCONTINENT EXCLUSIVE:
Netflix added 5.2 million customers from April through June, 1 million fewer than forecasts.Netflix Inc's subscriber growth fell short of
Wall Street expectations on Monday, sending shares of the normally high-flying stock down 14 per cent on fears that the company's rapid
The streaming video pioneer added 5.2 million customers from April through June, 1 million fewer than forecasts from Thomson Reuters
I/B/E/S, as it added new programming including "Lost in Space" and new episodes of Marvel's "Jessica Jones" and "13 Reasons Why.""We had a
strong but not stellar Q2," Netflix said in a quarterly letter to shareholders.Netflix said it had "over-forecasted" quarterly fluctuations
in the pace of new customers
The company noted that it had underestimated subscribers for seven of the past 10 quarters.Before the earnings report, Netflix shares had
gained 109 per cent, making it the second-strongest performer on the SP 500 index
In after-hours trading on Monday, Netflix shares sunk 14 per cent to $343.60, eroding $24.2 billion in market capitalisation and down from
an earlier close of $400.48."Investors are devastated by Netflix's Q2 projection that went down in dramatic flames
Now future projections are suspect and that decimates valuation," said Eric Schiffer, chief executive officer of private equity firm
Patriarch.Wall Street had been betting that Netflix would deliver outsized growth as demand for online entertainment increases around the
The company is spending heavily to hook new customers, budgeting $8 billion for programming and $2 billion for marketing in 2018.Netflix
added 670,000 subscribers in the United States, well below analysts' estimates of 1.19 million, according to Thomson Reuters I/B/E/S.It
signed up 4.47 million subscribers internationally, while analysts were expecting 4.97 million.The overly optimistic projections were
"pretty broad across multiple markets," Chief Financial Officer David Wells said on a post-earnings webcast.Executives voiced confidence
about the long-term health of the streaming service
Chief Executive Reed Hastings said median viewing hours were growing, though he did not provide specifics."The fundamentals have never been
stronger," Hastings said.Forrester analyst James McQuivey said he believed that the quarterly results were "not a sign of softening in the
business overall.""These are still millions of new subscribers, even if they didn't meet the expectations that might have been set by the
last two quarters, which were extraordinarily high," he said.Earnings per share came in at 85 cents, beating analyst forecasts of 79 cents
Total revenue rose 40.2 per cent to $3.91 billion
Analysts had expected revenue of $3.94 billion.For the current quarter, Netflix projected it would add 5 million customers
It is making a big push in India
Earlier this month, it debuted its first Indian original series, "Sacred Games," part of a slate of new shows aimed at the vast Bollywood
entertainment market.Netflix said operating margins would be narrower than previously expected because of the rapid strengthening of the
United States dollar, which appreciated by more than 5 percent against major trading partners' currencies in the second quarter
While most of the company's revenue growth comes from international markets, the vast majority of its costs remain
dollar-denominated.Hastings said the company would make adjustments to account for foreign exchange rates in order to "steadily" increase
operating margins.At the same time, Netflix faces growing competition.Amazon.com Inc plans to add more regional content in India as it
builds the Prime video service around the world
Apple Inc is pouring money into original programming, signing up A-list names including Oprah Winfrey
And ATT Inc has promised to boost investment in HBO after taking over the network in its Time Warner acquisition.Meanwhile, cable
distributors are offering smaller and cheaper bundles of channels.In the letter to shareholders, Netflix said it expected more competition
from international players including ProSiebenSat 1 Media in Germany and on-demand service Salto in France."Our strategy is to simply keep
