Correct me if I'm wrong but aren't DVD rentals the most profitable segment of Netflix's business?
If it is, declining rentals and no Saturday delivery has to be very bad. I believe it was this part of the business that financed overseas expansion. The streaming business while growing, is not profitable and the one that is is shrinking. How long can that go on before stock dilution and more borrowed money to service high content debt?
Yes of course declining DVD renenue has been very bad, an 80% drop in the stock makes that clear. Internet TV is still in it's infancy and Netflix's streaming business is growing fast. Investors know that the negative impact from DVD will not be around in the future and are now focused only on streaming.
Exactly, streaming is cheap and they won't be able to get enough cheap streamers to pay down debt and new content plus pour new money into new markets without having to borrow more money or dilute shares.