For the third quarter of 2011, the company is likely to report revenue of $806 million, an increase of 45.7 percent over the same quarter a year ago. Operating profit is likely to come in at $117 million, an increase of 68.3 percent over the same quarter a year ago. Net profit is likely to come in at $70 million, an increase of 84.2 percent over the same quarter a year ago.
In July, the company announced price increases for its subscriptions. The company raised its prices as it was confident of the strength of its streaming-only business. However, the company is pushing its DVD-only business as well. The DVD service can last a long time as a successful service and generate lots of satisfaction and lots of profits.
Revenue growth is likely to partly come from price increases. Though subscriber churn out can't be discounted, I think customers will stay and are hoping to look at new content the company is likely to provide in the fourth quarter. The price increase took effect essentially mid-September, on average. So NFLX gets a little bit of benefit at the end of the third quarter, and then the real benefit comes in the following quarters, Q4 and beyond.
Net-on-net, the company is likely to report EPS of $0.96 for Q3 2011, compared with $0.7 in Q3 2010. In the last month, the company's earnings momentum weakened.
The company is pushing its international expansion by simultaneously expanding in larger markets in Latin America. In the third quarter the company launched "Mad Men," a popular television series. The company is likely to provide more details regarding content licensing deals with different providers.
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