Netflix Inc surged more than 20 percent on Monday after reporting its streaming service signed up 3.57 million subscribers in the third quarter, vanquishing — for now — investor concerns about slowing growth at the world’s largest online TV network.
The company will become more profitable next year, providing fuel for original shows like the sci-fi hit Stranger Things and the crime drama Narcos, chief executive Reed Hastings told shareholders on Monday after results were announced.
Netflix, based in Los Gatos, California, plans to spend a net US$6 billion on programming next year, an increase of 20 percent.
The growth in subscribers reassured investors who have made Netflix one of the hottest stocks in recent years, believing the company can spur the adoption of on-demand TV globally, as it did in the US, and become a dominant global online entertainment company.
Confidence in that trajectory was shaken three months ago when subscriber growth faltered. The company finished the third quarter with a better-than-projected 86.7 million customers worldwide.
Netflix shares soared in extended trading, rising as much as 22 percent to US$121.28.
The company still faces hurdles, including subscriber growth that continues to slow. Netflix generates little or no profit and its programming budget is still burning through funds. With US$1.3 billion in cash at quarter’s end, Netflix said it plans to borrow via a debt sale in the coming weeks.
In the third quarter, Netflix added 3.2 million customers internationally and 370,000 in the US, beating analysts’ forecasts on both fronts. The firm projected it would sign up 5.2 million customers in the final three months of this year, lifting the total to almost 92 million.
Third-quarter revenue rose 32 percent to US$2.29 billion, beating the US$2.28 billion average of analysts’ estimates. Net income increased 75 percent to US$51.5 million, or US$0.12 a share, also topping the US$0.06 average of analysts’ estimates.
This quarter, Netflix forecasts US subscriber gains of 1.45 million, compared with the 1 million average of analysts’ estimates, and international additions of 3.75 million, compared with a 3.1 million estimate.
With the US market older and more mature, Netflix is relying on international gains to fuel its growth in the years ahead, including the 130 new territories the company began serving in January.
Netflix does not provide much detail on its performance in specific territories, though executives have singled out Brazil and Australia as two strong markets. Canada and the UK are two of Netflix’s largest overseas customer bases, according to analysts.
Last quarter, the company began accepting local currency payments in Poland and Turkey, and added local language user interfaces, subtitles and dubbing, as well as local content. Third-quarter streaming revenue increased 65 percent to US$853 million.
Future gains will have to come without China. Netflix on Monday said the regulatory environment remains challenging and that its efforts in that country would be limited to licensing shows it owns to existing online service providers.
“We still have a long-term desire to serve the Chinese people directly, and hope to launch our service in China eventually,” the company said.
Netflix has no plans to raise prices, though the company forecasts its average subscription price will rise 12 percent this year as older, less-expensive streaming plans are phased out.
The change in pricing policies contributed to the slowdown in user growth in the second quarter, as some customers canceled, and will restrain Netflix’s subscriber gains for the full year, the company said.
Softbank Group Corp plans to keep a stake in the chip designer Arm Ltd, even if it sells a partial interest to Nvidia Corp, the Nikkei reported. The companies are negotiating terms, the newspaper reported, citing sources. Softbank might take a stake in Nvidia after it buys Arm, the report said. Nvidia and Arm might also merge through a share swap, and Softbank would become a major shareholder in the combined company, it said. The two parties aim to reach a deal in the next few weeks, the sources said, asking not to be identified because the information is private. Nvidia is the
END TO SPECULATION: The hotel’s management contract has been extended, despite reports that it wanted to end its alliance with Hyatt Hotels over a deal with Riant Capital Singapore-based Hong Leong Hotel Development Ltd (豐隆大飯店股份) yesterday said it has extended a management contract to ensure the continued presence of the Grand Hyatt brand in Taipei, ending rumors that the two sides were parting ways. “We are pleased Hyatt is able to come to terms on the extension of the management contract of Grand Hyatt Taipei,” said Kwek Leng Beng (郭令明), executive chairman of City Developments Ltd (城市發展) and Millennium & Copthorne Hotels Ltd (千禧國敦酒店). Hong Leong Hotel Development is a subsidiary of Millennium, and both fall under the Hong Leong Group (豐隆集團). The Grand Hyatt Taipei (台北君悅大飯店), owned and built by
MOVING FROM CHINA? The article did not name the company, but Foxconn, Wistron and Pegatron were among firms chosen for a production-linked incentive plan in India An Apple Inc vendor is looking at shifting six production lines to India from China, which could result in US$5 billion of iPhone exports from the South Asian nation, the Times of India reported, citing people familiar with the matter who it did not identify. The establishment of the facility would create about 55,000 jobs over about a year, the newspaper reported, not naming the Apple vendor. It would also cater to the domestic market and expand operations to include tablets and laptops, the newspaper reported. Samsung Electronics Co and Apple’s assembly partners are among 22 companies that have pledged 110 billion
’WHITE BOX’: The open platform would give local firms access to Cisco’s cloud-based mobile network to develop 5G telecom equipment and tap into the global market The Ministry of Economic Affairs (MOEA) yesterday introduced a new 5G “open lab” in collaboration with US-based information technology and networking giant Cisco Systems Inc to address the rapidly growing “white box” 5G networking equipment market. The open lab will be a platform where Taiwanese manufacturers can access Cisco’s cloud-based mobile network to develop their own 5G telecom equipment, such as small-cell base stations, network switches, modems and Internet of things (IoT) devices, a ministry statement said. The open platform would allow Taiwanese manufacturers to tap into the lucrative 5G telecom equipment market, which was previously monopolized by Nokia Oyj, Ericsson AB