Video renter Netflix (NSDQ: NFLX) posted higher profit and revenue in Q4, suggesting that perhaps a bad economy can be good for companies that cater to home entertainment. The Los Gatos, Calif.-based company’s Q4 net income was $22.7 million ($0.38 per diluted share) just above FactSet Research’s analysts poll (via MarketWatch) which called for $0.36 per share and 44.6 percent higher than Q407’s $15.7 million ($0.23 per diluted share). Revenue was $359.6 million, a 19 percent year-over-year gain from $302.4 million.
— Subs: The DVD renter had 9.3 million customers, a 26 percent year-over-year rise from Q407’s 7.4 million subs. Most importantly, subscriber costs were lowered to $26.67 compared to $34.58 the previous year.
— Churn was 4.2 percent — the same as it was in Q308 — though slightly up over Q407’s 4.1 percent.
— Free cash flow was $51 million, more than double Q407’s $21.1 million. Free cash flow for fiscal 2008 was $94.7 million compared to $45.9 million in fiscal ’07.
— Stock buyback: Netflix’s board has authorized a stock repurchase program for this year, allowing the company to buy back up to $175 million in stock.
Staci adds from the conference call (via Seeking Alpha transcript): The questions were handled by e-mail, not a usual practice. CEO Reed Hastings admitted “in hindsight” the company lowballed subscriber growth for Q4; he said the “under-forecast” resulted from underestimating the positive impact of the new streaming devices from LG (SEO: 066570), Samsung, Microsoft (NSDQ: MSFT) and TiVo (NSDQ: TIVO) — and better-then-expected responses to marketing: “The precise impact of the recession is unclear but it