Netflix beats Street but loses 800,000 subscribers in Q3; DVD decline to continue

Shares of Netflix stock plummeted more than 27% in after-hours trading as the company revealed it lost more than 800,000 customers in the third quarter. Netflix now serves 23.8 million total customers and it reported third-quarter revenue of $822 million, beating estimates of $812 million. Earnings worked out to $1.16 per share, which also beat Wall Street’s consensus of $0.96. “While we dramatically improved our $7.99 unlimited streaming service by embracing new platforms, simplifying user-interface, and more than doubling domestic spending on streaming content over 2010, we greatly upset many domestic Netflix members with our significant DVD-related pricing changes, and to a lesser degree, with the proposed-and-now-cancelled rebranding of our DVD service,” Netflix said in a letter to shareholders Monday. Netflix expects DVD shipments to decline sharply during the fourth quarter, a continuation of the company’s earlier changes, but it expects growth in weekly gross additions compared to the December quarter last year. The company said it expects global consolidated income to fall between $19 million and $37 million during the fourth quarter and EPS is expected to land between $0.36 and $0.70.

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