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Netflix, Inc. (NFLX) Message Board

  • skeletor_pelosi skeletor_pelosi Jul 23, 2007 6:51 PM Flag

    This is the beginning of the end

    of Netflix and our friend secragtman, who will soon be looking for a new!

    Remember, never marry a stock.

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • From this point, NFLX will suffer a slow, protracted death. When you can purchase DVDs for $4, why rent? It's better to purchase a DVD and split the cost amongst your friends, then share it. We have such a pool in our office, and a few of the folks have already withradwn from their Netflix plans. As I've said before, the video rental business model is a race to the bottom.

    • I recently subscribed to Netflix for the 8 cds at a time.
      I have tried all the competition and Netflix is simply wonderful. It is so great I am looking to purchase stock.

    • "...seems to be forgetting that NFLX is still a company which turns a profit ..."

      But that was yesterday, and yesterday's gone (yesterday's gooooonnne).

    • this was not a good day to hve planned maint on the wec site.. this looks very bad...

      • 1 Reply to jennmarie2
      • Skeletor, I again invoke Warren Buffett's "I am greedy when everyone is fearful and fearful when everyone is greedy."

        As much as the street punished NFLX today for its price plan drops, reduced sub growth and profit guidance going forward, everyone seems to be forgetting that NFLX is still a company which turns a profit and which has a huge lead in all departments on BBI from balance sheet to infrastructure to business model to subs.

        This is not a one quarter battle. This is a battle to the death and NFLX's price reductions have made it clear that they are committed to doing whatever is necessary to scorch the earth and wipe out BBI. BBI is now completely in a corner; they tried lowering prices but NFLX called their bluff and are far better equipped to weather the margin reductions at this lower price than BBI, who already have a billion in debt and are unable to turn a profit as presently configured. BBI's earnings release will probably have impressive sub growth but it will be a lot less pretty than NFLX's and will have exorbitant marketing expenses and Total Access write offs. They certainly won't be anywhere near NFLX's $0.37 per share profit.

        BBI's sub growth may look good on paper, but it's artificial and more complicated than it might first appear. We won't know what's really going on until a quarter or so after BBI jerks up their TA price at the end of the year and we see how the subs react. NFLX is perfectly positioned to capture those subs alienated by the higher prices and store closings.

        Another reality, not much discussed, is that there really aren't that many people who watch more than four or so movies a week. If you're a loser with no life who watches 9 movies a week, then TA may be for you, because if you really want to milk it, you can abuse the system. But those are not the kinds of customers anyone would want, because they are not profitable. They rent too much and cost too much. Also, the majority of BBI TA customers are cannibalized from their prior walk-in customer base. Those former walk-ins would spend considerably more than the TA charges for the same or fewer movies (7 movies a month might cost $25-30, whereas TA allows a lot more movies a month, and for a lot less dough), so BBI is losing more profits despite their apparent sub growth. I don't buy that people buy popcorn and peripheral items; certainly not in quantities sufficient to justify keeping a giant store open.

        I use NFLX 2 off plan and I get 4 movies a week, 16 movies a month and that is PLENTY for me, really more than I want.
        I think when people realize that they just don't need to pay for the privilege of having six movies out at once, they will go to NFLX, which offers you better deals, more dvd selection, and more reliable delivery for less money than TA. Especially once the TA price is raised to a more realistic level. If you have a long term window, there are probably a lot worse times to buy NFLX than in the near term, when it seems to have cratered.

    • My favorite buy signal is when the chicken littles are running around, going "The sky is falling! The sky is falling!"

      I got some SBUX under 26 that way last month.

    • or Masters of the Universe to Democratic representation. How's it going, Skeletor?

      • 1 Reply to secragtman
      • Ah, pretty good. I'm teasing you, of course.

        Technology creates jobs, then destroys them to make way for new jobs. Probably, the ultimate winners in the end will be the cable companies. Their profit margins are well padded and they aren't subjected to the vicious, all-out battle between two giants. They can just sit out the battle and win the war. When Netflix and Blockbuster declare bankruptcy, they'll step in and purchase the assets for pennies on the dollar.

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