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Netflix profit to be used to buy back stock

2 February 2008 22:50 by Rich "vurbal" Fiscus | 7 comments

Netflix has announced a plan to buy back $100 million in stock by the end of the year. After the company endured their first real competition ever when Blockbuster was seen as a serious competitor, and even managed to take some customers from the leader in online DVD rental. However, with Blockbuster appointing a new CEO whose focus on profitability has changed that company's focus from beating Netflix to entering the kiosk market Netflix has seemingly had no problem luring customers back, resulting in higher earnings for the fourth quarter of last year.

With the U.S. economy looking ready for a full blown recession at any time it seems like an obvious time for Netflix to make such a move. Even many companies reporting good to excellent earnings have faced the wrath of shareholders who aren't happy with relatively low sales forecasts. If Netflix's stock price becomes another casualty of shareholder dissatisfaction it would be a perfect opportunity for the company to put their increased profits from last year to good use.

Although last year's competition with Blockbuster seems to be put to rest, with Netflix's increased focus on their Watch Instantly on-demand Streaming service, potential competition from Apple TV and other online video services threatens to make the kind of dent in their business that Blockbuster was only able to manage for a few short months. Whether these services can actually manage to become profitable without the traditional DVD rental business still at the core of the Netflix business model remains to be seen. If they are, don't expect Netflix to rest on their laurels.

Permalink to this article | Topic: Online video

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Discuss this article!
21Q (Senior Member) 3 February 2008 15:50
I'm more worried about MY welfare in the ressesion that WILL come. If the new president can't fix it we have a problem. And unfortunately instead instead blaming the one caused (Bush) they will blame the one that was currently in office. [ + quote]
Jasper44 (Member) 3 February 2008 16:26
*Originally posted by 21Q:* I'm more worried about MY welfare in the ressesion that WILL come. If the new president can't fix it we have a problem. And unfortunately instead instead blaming the one caused (Bush) they will blame the one that was currently in office. What did that have to do with Netflix? [ + quote]
o0cynix0o (Newbie) 3 February 2008 17:01
*Quote:* *Originally posted by 21Q:* I'm more worried about MY welfare in the ressesion that WILL come. If the new president can't fix it we have a problem. And unfortunately instead instead blaming the one caused (Bush) they will blame the one that was currently in office. What did that have to do with Netflix? Nothing, but 21Q saw the word recession and wanted to look smart by dropping a Bush reference. I just hope Netflix is able to continue doing what their doing. I like their service, both the rent and streaming. [ + quote]
ZimHosein (Newbie) 4 February 2008 22:20
I think this is an interesting move on Netflix's part especially since their current stock price is 25.89 as of today's close, which is about $10.00 above their 52 week low. This is gonna cost 'em quite a bit no? [ + quote]
21Q (Senior Member) 4 February 2008 22:24
*Quote:* *Quote:* *Originally posted by 21Q:* I'm more worried about MY welfare in the ressesion that WILL come. If the new president can't fix it we have a problem. And unfortunately instead instead blaming the one caused (Bush) they will blame the one that was currently in office. What did that have to do with Netflix? Nothing, but 21Q saw the word recession and wanted to look smart by dropping a Bush reference. I just hope Netflix is able to continue doing what their doing. I like their service, both the rent and streaming. Or could be that just like Netfilx, I am concerned. [ + quote]
kubapolak (Junior Member) 11 February 2008 21:29
I am a fan and user of netflix. I used to go to blockbuster all the time but I never picked up on their online service. I do like the competition, I believe it helps the prices stay lower and offers superior customer service. [ + quote]
borhan9 (AfterDawn Addict) 27 February 2008 1:03
Netflix was soo busy trying too keep blockbuster at bay they forgot to pay attention to apple's charge for their market share i guess thats wat shareholders are really worried about. [ + quote]