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The Feature Presentation
Netflix’s (NFLX) stock price advanced sharply after the online-entertainment service reported favorable earnings in the March period, topping the $100-a-share mark for the first time. Indeed, share net of $0.59 beat our estimate of $0.52 and the $0.37 delivered in the prior year.
The story here is subscriber growth, which Netflix continues to achieve at a rapid pace. In fact, the company added a record 1.7 million new customers, finishing the quarter with nearly 14 million total subscribers. This latest total represents growth of 35% over the past 12 months and helped revenues improve 25%, year over year in the first three months of 2010.
The expanding video-streaming business seems to have ignited Netflix’s growth prospects. The company has taken aggressive steps to bolster its catalog of streaming videos, including recent agreements with movie giants such as Time Warner’s (TWX) Warner Bros. to delay release in exchange for expanded streaming rights. At the same time, Netflix has thrust its streaming technology into the video game realm, signing a deal with three gaming console manufacturers, led by the Nintendo Wii, which is currently in nearly 30 million households.
The addition of the streaming capabilities to more popular devices is also likely to boost growth. One of the more notable avenues is the addition of streaming apps for Apple’s (AAPL) iPad and soon the iPhone.