2011 was not a good year for Netflix. For the most part, Netflix spent most of the year trying to avoid admitting that it had no idea what it was doing. First it raised prises, then it split into two separate businesses (Qwikster!), then it didn't split into two businesses, and then - well, they managed to not throw in the towel, but they were certainly saved by the bell.
Ahead of releasing their fourth quarter earnings yesterday afternoon, though, Netflix had given investors plenty of reason to expect unpleasant results. Surprisingly, Netflix announced that they actually exceeded Wall Street's expectations by nearly $20 million by posting an earning of $875.5 million for the 2011 fiscal year. Netflix shares on the stock market were up to $0.73, higher than the original projection of $0.54.
Tracing back across the four financial quarters of 2011, Netflix never really took a substantial hit after their abysmal public relations adventure from the summer of last year. Incredibly, subscribers were apparently not terribly put off by being charged higher prices for subscribing to both streaming and DVD services because the amount of domestic describers actually increased from the Q3 to Q4.
Netflix also managed to contain the fallout of the price hike over the summer and subsequent snafu regarding Qwikster, or so it appears, because they actually collected 24.3 million subscribers, which is up from 24.3 in Q3 2011 and nearly 25% more subscribers than they had in Q4 2010 when they had 19.5 million subscribers.
Netflix's net income, however, was substantially lower in the fourth quarter, down from $62.4 million in Q3 to $40.7 million in Q4.
In a Q&A following the release of the financial results, Netflix CEO Reed Hastings and Netflix CFO David Welles took some questions regarding the implications of their company's financial performance in 2011. They discussed their plans to branch out into Latin America, where they launched services in September 2011.
A notable comment from Hastings during the Q&A pertained to the possible addition of video games to Netflix catalog. Addressing whether Netflix would begin to offer a video game subscription service, Hastings was brief in saying, "We have no plans to enter video games."
So far today, Netflix shares appear to be experiencing quite a bounce this morning following yesterday's financial release, as shares are now up nearly 20% and valued at approximately $114.