Netflix posts a first-quarter loss of $8.8 million

April 22, 2005

Ouch! This online rental war is getting serious. Netflix took a 17
cent per share loss after the news of the first quarter losses. Oddly, revenues
are up tremendously over last year though, first-quarter revenue was $154.1
million, up from $100.4 million a year ago. So what's the problem? It's those
darn guys in marketing again!

Netflix says it predicts even further
losses, as long as they are in competition with Blockbuster. In addition, they
fully expect Blockbuster to offer more price cuts in the second quarter and by
golly, Netflix Chief Executive Reed Hastings says, they are going to
match them.

The company forecast a fiscal-year net loss of $5
million to $15 million on revenue of $660 million to $685 million. The
revenue estimate was lower than previously forecast.

Hastings gave no firm time when the company would move back to
profitability from a plan announced late last year to run at break-even to
stay ahead of new competitors.

"To the degree that Blockbuster is on a
hyperaggressive $50 million path, that necessitates a response from us,"
Hastings told analysts. "Presumably at some point they are interested in
profits also and that might trigger them backing off marketing and price
(cuts)."

You can read the
whole story over at ZD Net. Looks like this could be a long hot summer
for the online movie rental business. We have to wonder what deals are coming
our way from Blockbuster and Netflix as well!

Source: ZD Net