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Netflix, Inc. (NFLX) Message Board

  • yuri111 yuri111 Sep 14, 2002 10:22 PM Flag

    one channel, two channels, blah, blah

    Juniper came and took Cisco's market share, Cisco flexed some muscles and killed JNPR.

    AMD tries to kill INTC every fife years and end up in the gutter.

    etailers came and said they will kill WMT and they are gone.

    Get it once and for all --- video rentals is an old industry with 3 huge players and if someone comes with a new way to milk the consumers, they will steel the idea and elliminate the competition.

    It is only a matter of time 6-12-18 months befoer Blockbuster will KILL puny NFLX.

    They are everywhere, they've got the distribution base already in place, they've got the brand name recognition, they've got the advertizing money, they have lower costs due to volume purchasing, they have the customer base.

    It will all come down to price war and NFLX will disappear.

    bst rgrds

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    • By being a stock holder and a user does that make me a "subsriber"?

    • Hey Yuri, it looks that you're adding a lot of excitement to the board in the last couple of days.

      Tell us more about your theory, a couple of examples are not enough. There are thousands of categories where there is a lot of place for more than one player. From softdrinks to videogames.

      Tell us why it could be in the interest of BBI to decrease prices (uyyy, bloddy), or why it's not better for them to simply buy the small company while it's still small.

    • Again, respect your opinion...but I take a different view gleaned from actual customers who subscribe and say they'll "never go back". Not statisically significant but the % of "never go backs" out of my sample of hundreds is worthy of further investigation.

      As for "very active movie renters", if you mean 5-6 rentals per month as "very active" then we have different definitions of "very active". 5-6 is the reported avg BB and industry wide rental activity...unchanged for the last 10 is the "consumers behavior", it will continue, and not surprisingly, it is exactly what NetFlix is experiencing with its customer base. Bottom line, NetFlix is simply a better way to rent 5-6 movies a month...PERIOD.

      America likes the underdog. I don't believe customers will go back to BB just because they are BB or for a small differential in price, IMO. In other opinions, I don't believe BB or WMT (or anyone else) can match NFLX's complete service level. Your argument makes the assumption it can which doesn't give enough credence to the fact that this business is ALL ABOUT cust. sat.

      This company has simply gotten better every single year with better services, offerings, etc. It takes a customer focus (knowledge of your customer and potential customers) to build that into your products. BB doesn't know it and WMT certainly doesn't know it.

      Plenty of legs to stand on. The question is not whether NFLX will survive or not...the question is "how big will they get"? Think about it. They are growing cash, they have $70M in the bank, and they are growing customers 100% year over year in a "recurring revenue" model. Do they top out at 2 million customers ($40M per month/$500M per year), 3 million, 5 million ($100M revenue per month, +$1.2B revenue per year). Gross margins are in line with the industry and free cash flow and operating profitability is +2 times BB.

      How big will they get? Is a market cap of $250M ($12 per share) unreasonable? No.


    • I would worry about the growing subsriber cost now, not when it hits $120.

      People who subsribe to NFLX services are very active movie rental viewers. Those are not "new" viwers, they are "defectors" from BB and suchlikes. All BB needs to do is to stop the defection and NFLX will be done for.

      The only way this company can survive is to be able to expand its margins. With the subsriber additions bound to slow and aquisitions costs already on the rise the margins are going to shrink.

      NFLX doesn't have legs to stand on, IMHO.

      bst rgrds

    • It was filed on 8/14/02...1 month ago. I read it the day it came out. Details are important...especially when dealing with financials.


    • Yuri,
      You and I are talking the same metric...we both simply haven't gotten into details. I respect your opinion and I'm sure our definitions of free cash flow are the I said i'll post more on the subject later. No time today.

      Free Cash Flow (FCF) = CashFlow as Reported less the real non-cash, non-recurring items (which still appear on these statements due to acctg rules). FCF is true cash flow and it tells whether a company is truly adding to their cash postions or not. Its the only thing that matters

      More later.


    • <Moreover, the 10-Q filed on 8/14/2002 (this is what you meant, i'm sure)....clearly shows an increase in cash position from an free cash flow operating basis>

      Increase in cash position and positive operating cash flow aren't the same. a company can borrow 100 mln and show an increase in cash position of 90 mln while its operations would lose 10 mln.

      NFLX added 11 mln in noncash interest expense they DIDN'T subtract to begin with, when they were calculating net income. That's just about all of your positive operating cash flow in the first 6 months.

      Take care.

      bst rgrds

    • I'm glad we finally agree on the quality of the business model...finally.

      BUT...mailing and having a successful online presence is the secret sauce....

      I doesn't appear BB or WMT can do that anytime in the foreseeable future if at all. They have tried and failed already online and they have no clue how to run a successful ship/return mail operation.


    • >There was no 10-Q filed on 1/14/2002>
      09/14/02 --- sorry a typo, 10-Q was filed last sat.
      You've read it haven't you

      bst rgrds

    • NetFlix by pioneering the market is doing a big favor to BB and WMT. Why should BB and WMT spend their money to understand the metrics when they can learn those from NetFlix. BB and WMT know that a) flat-rate pricing of $20 per month works for consumers, b) $20 per month does get positive operating cash flow, and c) $20 per month has high costs of mailing.

      BB can SQUASH Netflix with these metrics before Netflix can even garner 5% of the rental market. Netflix can not compete with BB since it has only one channel. And, if I were BB, I would wait several more months before I squash NetFlix - let them teach me all the metrics that I need to know.

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