Netflix -- First, The Good News
Netflix said Monday that while it mailed out fewer DVDs during the first quarter versus the same quarter last year, its profits rose a whopping 86 percent. Online streaming accounted for the growth, the company said as many of its 23.6 million subscribers (up from 14 million last year) opted to view their rentals online instead of having them delivered by mail. Clearly analysts are less than enthusiastic about the results, predicting that the company will be forced to make expensive licensing deals with studios that will not be offset by lower distribution costs. Michael Pachter, an analyst at Wedbush Morgan Securities, told today's (Tuesday) Wall Street Journal that the costs of licensing content for streaming "are rising faster than we thought, and that means earnings growth is slower than we thought."