1.1 million new subscribers boost Netflix earnings

Subscription figure marks a record for Netflix, which saw a jump in fourth-quarter earnings and sales and beat analyst expectations.

Netflix has more than a million people to thank for its latest surge in sales and earnings.

After winning 1.1 million net new subscribers in a single quarter, the company announced Wednesday that fourth-quarter profits jumped 36 percent to $30.9 million from $22.7 million in 2008's final quarter. Sales climbed 24 percent to $445 million from $359 million in the year-ago quarter.

The new subscribers added since the third quarter marked a record for the online rental company, which offers DVDs through the mail and streaming content for 12.3 million customers. Netflix also lost fewer customers in the fourth quarter, as the churn rate, or the number of people who don't renew their monthly subscription, dropped to 3.9 percent from 4.4 percent in the third quarter and from 4.2 percent in 2008's final quarter.

The company added nearly 3 million new subscribers over the full year.

The final quarter also saw Netflix strike a deal with Nintendo to provide its streaming video service on the Wii. Nintendo now joins Sony and Microsoft in offering the Netflix service via their game consoles. Netflix's streaming service has also taken off among regular subscribers, prompting the company to forecast that two-thirds of its customers will watch movies that way by the middle of 2011.

For its first quarter of 2010, Netflix expects the number of subscribers to reach up to 13.8 million. It's also forecasting quarterly earnings of up to $32 million on sales of $490 million to $496 million, all higher than analysts have been predicting.

The fourth-quarter surge and outlook for 2010's first quarter combined to push Netflix stock up more than 20 percent Thursday morning.

About the author

Journalist, software trainer, and Web developer Lance Whitney writes columns and reviews for CNET, Computer Shopper, Microsoft TechNet, and other technology sites. His first book, "Windows 8 Five Minutes at a Time," was published by Wiley & Sons in November 2012.

 

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