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Netflix (NFLX)
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Emcee:  Glenn Petersen Type:  Unmoderated
Investors Snap Up Shares of Netflix in Initial Nasdaq Trading

NEW YORK -- It's amazing what dropping the "dot-com" from your name can do for an initial public offering.

Netflix Inc. , an online entertainment company that, when known as had to once cancel its IPO, opened higher initial trading Thursday.

Shares of the Los Gatos, Calif. , company opened on the Nasdaq Stock Market at $16.19, 7.9% above the $15 price set on its IPO of 5.5 million shares. Near midday, the shares traded even higher at $16.95.

The offering, led by Merrill Lynch & Co . Inc. (MER), priced at the high end of price talk of $13 to $15 a share, an unusually aggressive pricing in what has been a tough market for unprofitable technology IPO hopefuls.

"To price at the top of the range, we were very fortunate," said Reed Hastings, the company's chief executive, in an interview.

Netflix is the country's best-known online entertainment subscription site, allowing users to rent three DVDs a month for a monthly subscription charge of $ 19.95.

One of Netflix's biggest advantages is its subscription model, said George Nichols, an analyst with in Chicago .

"These ongoing billing relationships, rather than one-time purchases, have annuity-like characteristics that provide a steady revenue stream," he said.

It also has some growth trends in its favor, Mr. Nichols said. "As far as consumer technologies go, DVD is still relatively young, and many new DVD players are being sold as the mass market fully adopts it."

The business isn't yet profitable, though the company has been narrowing its losses. In the first quarter, Netflix logged $30.5 million in revenue, for a $ 4.5 million net loss. In the comparable period in 2001, it lost $20.6 million on $17.1 million in revenue.

For Netflix, the offering marked a success after failing to come to market two years ago. Netflix originally filed to raise $86.3 million through Deutsche Bank in April 2000 , but the offering was withdrawn three months later as the IPO market began its long, dry period, one that still exists.

The offering was revived in March of this year, but with new terms. The company filed to sell as much as $115 million through Merrill Lynch, though, in the end, the offering raised $82.5 million.

Netflix's Mr. Hastings said he believes that the proceeds now will "give pause to our competitors" and allow the company to more aggressively market its services free to potential customers. Nine of 10 people who receive Netflix free initially end up subscribing, he said.

The challenge to the business is twofold, Mr. Hastings said. Blockbuster Inc. (BBI) recently said it would get into the mail-rental business, putting it into direct competition with Netflix.

The other, Mr. Hastings said, was getting people to feel comfortable renting DVDs online and receiving them through the mail, a process that "just sounds odd to people until they try it," he said.

Netflix featured one of the odder risks to its business in the offering documents filed with the Securities and Exchange Commission: the U.S. Postal Service. If the Postal Service does indeed raise rates this summer, it "will adversely affect our gross profit if we elect not to raise our subscription rates to offset the decrease."

Customer satisfaction might also take a hit if the Post Office stops Saturday delivery and customers can't get their DVDs in a timely fashion, Netflix

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ReplyMessage PreviewFromRecsPosted
1534'Strategic transactions"? wink winkIntelim-Monday
1533Netflix to raise $1 billion through debt offering to fund new content and other Glenn Petersen-Monday
1532Sleep is highly overrated.Glenn Petersen-last Thursday
1531I think that this observation best explains the comment: Hastings got a little Glenn Petersen-last Thursday
1530Amazon? HBO? Netflix thinks its real competitor is... sleep My competitor to SirWalterRalegh-last Thursday
1529This is self-confidence almost to the point of arrogance. I don't disagree wIntelim-last Thursday
1528Likely "they" will pump this up for a bit in the morning before it begmore100-April 18
1527Amazon? HBO? Netflix thinks its real competitor is... sleep That’s according toGlenn Petersen-April 17
1526Netflix earnings: 40 cents vs. 37 cents per share expected Netflix reports firstGlenn Petersen-April 17
1525After a knee-jerk pullback after earnings report, NFLX is now >$149 bid in reSr K-April 17
1524Last 30 minutes trade will decide whether it is gap up or gap down after earningmore100-April 17
1523Netflix has a potential 'billion dollar' opportunity that it's just Glenn Petersen2April 13
1522Netflix’s newest production should scare investors marketwatch.comJakeStraw-April 7
1521Netflix now lets you download videos for offline viewing in Windows 10 mspoweruGlenn Petersen-April 4
1520 Disney Should Get Inspiration From Netflix seekingalpha.comKrigannie-April 4
1519Netflix has a documentary Fastball, 2016, with lots of vintage video and commentSr K-April 3
1518Netflix is replacing five-star ratings with thumbs up or down Posted Mar 16, 20Sr K-April 1
1517 Here's Why Netflix Is Looking For Translators Trefis Team, Forbes ContribuGlenn Petersen1April 1
1516Why shows leave Netflix An interesting piece.Intelim3March 30
1515After ATHs and a pullback, fresh all-time highs now, 148.14Sr K-March 30
1514Looking good! $150+ soon?Intelim-March 22
1513All-time high, and breakout. 147.52 147.70Sr K-March 21
1512all-time high, 146.50Sr K-March 16
1511I'm quite positive it will outdo conventional TV in the neat future.Intelim-March 15
1510UPGRADE: Netflix (NFLX) upgraded by Jefferies from Underperform to Hold.Sr K-March 15
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