Earnings: Netflix 1Q Income Rises 125 Percent Over 1Q06, Yet Sees Decreases From Last Quarter ’06

Netflix (Nasdaq: NFLX) reported that 1Q income came in at $9.9 million up up from $4.4 million in 1Q06, a rise of 125 percent. Though its earnings decreased 33.6 percent when compared to 4Q06’s results of $14.9 million. During its conference call, Reed Hastings, Netflix co-founder and CEO, cited increased competition from Blockbuster for results being “at the low end of the range.” On the revenue front, Netflix posted a 36 percent gain with $305.3 million, an increase over 1Q06’s $224.1 million. It also saw a 10 percent sequential growth rise from 4Q06’s $277.2 million. Additionally:

Subscribers: Netflix ended 1Q with approximately 6.8 million subs, representing 40 percent year-over-year growth from 4.8 million in 1Q06. Those numbers also represent an 8 percent gain from 6.3 million during 4Q06.

Looking ahead: For 2Q, Netflix to increase its subs to 6.9 million, while raising revenue to $309 million and expects income to range between $13 million to $17 million. Earnings Release | Webcast

Update: Blockbuster’s Total Access subscription service gives consumers free in-store rentals when they return DVDs they ordered online to a store, as opposed to dropping it in the mail.
During the conference call, Netflix derided Blockbuster’s aggressive pricing under that service, with Hastings noting ruefully that “when you’re giving away the store, you’re going to impact competitors’ businesses.” He predicted that Blockbuster won’t be able to sustain its subscription program at current prices. Barry McCarthy, Netflix CFO, offered the view that Blockbuster would raise prices and that Netflix will gain subscribers when that happens. “The larger Blockbuster’s business grows, the more money they’ll eventually lose,” McCarthy said. ” We had projected them to lose around $150 million to $200 million and we’re now leaning towards the higher end of that range. Blockbuster says that it