It’s hard to beat expectations after your share price has soared from $60 to $330 in a year. Incredibly hard. Yet that is what Netflix just accomplished on Monday evening — and the company’s share price shot up another 10% during after-hours trading. The company’s Christmas-quarter guidance was spectacular. Wall Street expected earnings of 45 cents for the December quarter and Netflix just guided between $0.47 and $0.73. And according to Variety, Netflix also plans to double its spending on original programming in 2014 from its already sumptuous 2013 levels. This could leave Hulu reeling.
It is fascinating how a handful of tech companies have started utterly dominating the consumer landscape in America. Netflix, Amazon, Apple, Facebook and Google have been on fire for the past five years, beating earlier revenue projections by a country mile. Their earnings power is a mixed bag, with Apple reaching giddy heights and Amazon continuing to zigzag across the break-even point.
But all of these juggernauts have a far more prominent role in the lives of American consumers than just about anyone had expected back in 2008. And they are all building such massive user bases, creating formidable barriers for their smaller rivals. Netflix’s lead over Hulu continues to explode; Amazon, Google and Facebook have no U.S. rivals left in their core businesses; Apple has only Samsung left as a serious high-end smartphone challenger.
A handful of companies have discovered crucial truths about how American consumers spend money in the digital era. You might add Samsung to this elite group. The rest of the tech world is being left behind, with companies ranging from Microsoft and Dell to Sony and Nintendo fumbling along, trying to rediscover their earlier swagger.
For the time being, Netflix is managing to cling to the winner’s circle.