Netflix tumbles after forecasting slower online customer growth

April 23 (Bloomberg) -- Netflix Inc. said customer growth may slow after reporting first-quarter sign-ups that met analysts’ estimates. The stock fell as much as 14% in extended trading.

Netflix, based in Los Gatos, California, added 1.74 million new U.S. online subscribers to reach 23.4 million, the company said today on its website. That matched the average of nine analysts’ estimates compiled by Bloomberg. Second-quarter growth will be slower.

Chief Executive Officer Reed Hastings is racing to add streaming customers to confront competition from Comcast Corp.’s StreamPix service and Verizon Communication Inc.’s venture with Coinstar Inc.’s Redbox for an online product. The company has commitments to spend $3.9 billion over the next five years on films and TV shows, according to filings.

Netflix posted a first-quarter net loss of $4.58 million, or 8 cents a share, the result of costs for its Latin American and U.K. expansion. That was smaller than the $9 million to $27 million loss the company predicted in January. Sales rose 21 percent to $869.8 million, beating the $865.5 million average of 27 analysts’ estimates.

Netflix fell as much as 14% to $87.94 in extended trading. The stock lost 4% to $101.84 at the close in New York and has gained 47% this year.

Analysts and investors say Netflix’s domestic streaming business may stall this year, at a time when the company needs additional revenue to stay ahead of new competitors and counter unprofitable growth overseas, including continued losses in Latin America.

For the second quarter, domestic online users will increase to between 23.6 million and 24.2 million, suggesting an increase of as much as 800,000, while DVD users shrink to as few as 8.95 million, the company said. Analysts were predicting a gain of 781,000 online users. The DVD business was expected to lose 623,000 customers this quarter.

The company may make money this quarter. Netflix said net could range from a loss of as much as $6 million, or 10 cents a share, to a profit of $8 million, or 14 cents. on sales of $873 million to $895 million.

Bloomberg News



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