Netflix Earnings Rise in 4th Quarter: CEO HASTINGS IS OPTIMISTIC ABOUT 2008

Jan 24, 09:18 AM

Jan. 24--Netflix reported its second consecutive quarter of strong results Wednesday, closing 2007 with better-than-expected revenue growth and a projection for potentially bigger subscriber gains in 2008.

The Los Gatos online DVD rental company said revenue for the quarter that ended Dec. 31 was $302.4 million, up 9 percent from $277.2 million for the same period in 2006. Revenue for the third quarter of 2007 was $294 million.

Net income for the fourth quarter was $15.8 million, or 24 cents a share, compared with $14.9 million, or 21 cents a share, a year ago. Net income for 2007 was up 36 percent.

Company officials said they believed a still-expanding market for DVD rentals by mail, as well as Netflix's ability to capitalize on less intense competition from Dallas-based Blockbuster, could lead to as many as 8.9 million subscribers by the end of the year. Netflix finished 2007 with 7.48 million subscribers, up from 6.32 million at the end of 2006.

Netflix continues to plan for a long-term transition to Internet-delivered video and earlier this month announced a partnership with LG Electronics to develop a set-top box that would bring streamed movies and TV shows to televisions.

But Netflix Chief Executive Reed Hastings also said consumer acceptance of high-definition Blu-ray DVDs would accelerate decisively if the price of Blu-ray players dropped under $200 and the Universal and Paramount studios offered support

for the format. If that happened, he said, it would "fuel another decade of robust disc-based entertainment."

Contact Mike Antonucci at mantonucci@mercurynews.com or (408) 920-5690.

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