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Netflix shares fell 13% yesterday, but at the time of this writing are up over 5% today. The drop is a result of a trimmed fourth-quarter outlook.

"We see this as an incremental negative for the bull-case on Netflix shares, which contends that the company is relatively insulated from a slowdown in the broader economy, since DVD-by-mail consumption should at least hold up, if not increase, as cash-strapped consumers increasingly stay home," wrote J.P. Morgan analyst Barton Crockett (as quoted by Reuters).

I have to admit I am a little surprised to see it slip. Compeititon has certainly increased lately as more places are offering streaming video, but I also thought Netflix's recent deal with Starz was pretty huge for the company in that sector because that expanded Netflix's streaming catalog very significantly, and this has been the biggest issue holding it back. I also took this as a sign that Netflix was indeed taking their streaming content more seriously and expect to see more deals similiar to that with Starz arise in the near future.

"Net subscriber growth in July was in line with expectations but August was unusually weak", said Netflix CFO Barry McCarthy. "In September, the business regained momentum with results slightly below original expectations, likely due to the economic climate."

Guidance for the fouth quarter was revised as follows:

- Ending subscribers of 8.95 million to 9.25 million, down from 9.1 million to 9.7 million

- Revenue of $353 million to $359 million, down from $357 million to $367 million

- GAAP net income of $18 million to $23 million, unchanged from prior guidance

- GAAP EPS of $0.30 to $0.38, increased slightly from $0.29 to $0.37

The Popcorn Bowl

In other Netflix news, the company hosted a record-setting contest called the "Popcorn Bowl" which had the goal of getting the winner(s) into the Guinness book of world records for most consecutive hours spent watching movies.

According to the contest's rules, each movie had to be viewed until the last credit rolled. The participants were closely monitored by judges and medical professionals who checked their vital signs on a regular basis to ensure they could safely endure the challenge. Under Guinness World Record rules, competitors could not divert their eyes from the screen, but were allowed 10-minute breaks between movies.

The winners were Suresh Joachim and Claudia Wavra (pictured). Joachim apparently holds a total of 33 Guinness World Records.