Netflix gains subscribers, shares surge

Netflix shares surged in after-hours trading Wednesday after the US video service announced earnings better than expected by analysts and that it gained subscribers in the fourth quarter. The Los Gatos, California-based company posted a quarterly net profit of $41 million and earnings per share of 73 cents, well above the 55 cents per share forecast by Wall Street analysts. Revenue rose 47 percent to $876 million, higher than the $859 million expected by analysts. Netflix also said it had 24.4 million US subscribers at the end of December, up from 23.8 million at the end of the previous quarter. Netflix shares were up 13.64 percent at $108 in after-hours trading. Netflix chief executive Reed Hastings and chief financial officer David Wells said they expected a loss of between $9 million and $27 million in the current quarter due to increased international investment. They said declining profits from the DVD-by-mail service and international and technology and development costs would likely result in a loss for the full year. "As a result, we expect modest quarterly losses, as well as losses for the calendar year," they said. Netfix has expanded to Britain, Canada and Latin America over the past two years, but Hastings and Wells said further international expansion was being put on hold for the time being. "Until we achieve our goal of returning to global profitability, we do not intend to launch additional international markets," they said. Netflix shares hit a high of $304.79 on July 13. But the company suffered a backlash from members in September when it announced a price hike for customers who receive both its online video streaming service and its DVD-by-mail service. In addition to raising prices, Netflix announced it would separate the two services, with the DVD rental service rechristened "Qwikster." After customers voiced outrage and began quitting en masse, the company quickly backpedaled on the separation plan, but not the higher prices.