For the IT industry, 2011 was one of its best, with companies and products emerging in new markets and several mergers and acquisitions. But, just like other industries, fourth quarter is the most significant as it sets the trend for the New Year. Some companies had high expectations for the quarter and for some it paid. It is the case of Netflix, which had a raving fourth quarter, managing to regain most of its customers.
On Wednesday, a confident Netflix released its fourth quarter figures which show that despite the worries and critics, it managed to end December with 24.4 million subscribers in the United States. The increase is significant, especially when thinking that at the end of September, Netflix had 23.8 million subscribers.
Netflix had a profit of $40.7 million, or 73 cents a share and as good news as the fourth quarter profits are, one cannot help to remember that one year ago, the company had recorded $47.1 million at 87 cents a share.
The company has decided to boost prices by much as 60 percent in 2011’s summer and as a result around 800,000 subscribers called it quits. With so many subscribers taking their business elsewhere, analysts and investors worried that the company will be heading towards a dead end.
The overall concern affected the company’s stocks too and it lost most of its $305 peak reached in July. But, after the fourth quarter earnings have been publicized, things looked better for Netflix. The company’s stock raised $15.08 by 16 percent reaching $110.12 in extended trading.
Netflix CEO Reed Hastings had a difficult time over the past few months and the fourth quarter earnings might be exactly what the doctor ordered. Hastings said in an interview released Wednesday that “you are never as smart or dumb as they say. We know we are just beginning to climb back in terms of consumer trust and affection”.
As good as 2011’s last quarter was, analysts still can’t give a sure estimate for the upcoming months. Frost & Sullivan analyst Dan Rayburn told Associated Press that “it’s still too early to know how much success Netflix is going to have this year, but seeing those gains in customers makes investors feel safer”.