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Netflix stock hit after it sells bonds, issues stock for $200 million capital infusion

post #1 of 22
Thread Starter 
Netflix announced it would be selling $200 million in convertible bonds to a venture capitalist, as part of an effort to raise money for "general corporate purposes," news that worried investors and sent the company's stock price down 7.7 percent in after market trading.

Netflix entered its "note purchase agreement" with Technology Crossover Ventures, a firm the Wall Street Journal notes has acted as a late stage investor in other large tech firms, including Groupon.

The company separately filed a registration with the SEC for a stock offering of "an indeterminate amount of securities to be offered at an indeterminate prices." The firm's filing notes "an investment in our common stock involves a high degree of risk."

The company noted in its filing, "we intend to use the net proceeds from this offering for general corporate purposes, including working capital and capital expenditures."

This summer, Netflix separated out a streaming subscription option from its DVD mailing business, and subsequently announced plans to split the two offerings out into separate companies, a move that complicated and raised the overall price customers would pay to use both services.

After a consumer backlash, the company announced it would abandon the split, but it continues to report that "our domestic streaming and DVD gross cancellations continued to steadily decline in October and the first half of November."

The filing notes the boondoggle as an ongoing risk, stating that "If we are unable to repair the damage to our brand and reverse negative subscriber growth, our business, results of operations, including cash flows, and financial condition will continue to be adversely affected."
post #2 of 22
WOW. What a downfall. Yikes.

I personally love my Netflix (Canada streaming) and never understood why people complained so much about the price change and cancelled. Netflix is still so cheap.

I like the company as a online pioneer in providing me content at a price that usually makes me skip the pirate bay. In fact, it was the first online content provider I ever paid for outside iTunes.

I wonder if any company will snatch them up now that they're relatively cheap?
post #3 of 22
<eom>
post #4 of 22
Glad to see the repercussions of a stupid, greedy move.
You can't raise the price 60% and not expect people to abandon you. Even in the best case scenario, you're still pulling 50% of the product away from people, and only 20% of the price.
post #5 of 22
The price always remained the same for me, I'm streaming only. I used to get DVD's from Netflix, but that was many years ago.

It's still the best deal around, and if anybody knows of something else that has a better selection and more selection for a better price, then let's hear about it.
post #6 of 22
This is an example of some one who became really wealthy and because of that wealth became out of touch. Eventually that out of touch CEO decided he knew better than the customers and tried to drastically change the company that was doing nothing but bringing in profit. Even when the customers were complaining he said that he knew what he was doing and defended his price hike and company split. But when stocks dropped to very extreme levels he apologized. Only when the pocket book was effected then he acted in the best interest of the customer and stopped the split. Problem is now that people have left by the millions Netflix is gonna have to try and rebuild and gain the trust of the people again.

I would hate to see Netflix go under. I actually like the features. But why fix a good thing. If it isn't broken don't fix it. Netflix wasn't busted. Price hikes ok but twice within 7 months. December 2009 and then July 2010. Too soon.

And the licensing. I can understand netflix having to pay for that. But at least tell the customers why you have to raise prices. That way they can blame Stars instead.
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post #7 of 22
Quote:
Originally Posted by allmypeople View Post

WOW. What a downfall. Yikes.

I personally love my Netflix (Canada streaming) and never understood why people complained so much about the price change and cancelled. Netflix is still so cheap.

Completely agree - for 1/15th the price of cable (or less, depending on your market) I get commercial-free streaming of TV and movies. I'd be willing to pay 2 or 3 times what I'm currently paying for streaming Netflix, and still be happy.

Granted it's not a complete collection of first-run material (especially for TV), but it's expanding all the time and I'm more than keeping myself occupied just catching up with old shows I never got to see the first time around - Mad Men, Tudors, the new Doctor Who, etc.
post #8 of 22
So clearly Reed Hastings has done a poor job on the PR front over the last year, but that doesn't change the fact that the price increase was inevitable. Netflix raised prices by up to 60%, but content providers were raising prices on them by 1000%+. (Starz was paid $30M in Oct 2008, but recently turned down a $300M+ offer.) Netflix is still an unbelievable value at $8/month for streaming. Pair it with Hulu Plus ($8/month), and an occasional movie from iTunes or Redbox (or even Netflix DVD's) and you have a viable alternative to cable for ~1/2 the price (at least for some people).
post #9 of 22
Quote:
Originally Posted by audio_inside View Post

#notapplenews
<eom>

Netflix streaming is part of the AppleTV as well as clients available for iOS and Mac OS.

So yes, this is Apple news.
post #10 of 22
Quote:
Originally Posted by Apple ][ View Post

It's still the best deal around, and if anybody knows of something else that has a better selection and more selection for a better price, then let's hear about it.

Hulu.

There's almost no current content available from Netflix streaming, but just about everything I want to watch is available on Hulu.

Also what little I streamed from Netflix almost put me at the max for my internet monthly data cap while streaming from Hulu has never gotten me even half way to that cap.
post #11 of 22
i hope Netflix streaming doesn't die. The service is so much better than cable TV with the exception of quality video. The quality of the streamed video just isn't as good as watching a DVD. They need to update their servers to spit out HD quality at a faster rate.

One option would be to let people download their videos and play them within twenty-four hours. At least that way I could set up my videos one day in advance and play them in high quality. I still would want the instant streaming ability.

I don't like Hulu. They don't have great quality and they incorporate advertising just like broadcast TV. I don't want to pay to watch advertising. If I wanted to see advertising I'd buy a DVR and set it to record the shows. It would be cheaper in the long run than using Hulu for TV shows.
post #12 of 22
I just bailed on Netflix. I think the content on the streaming side sucked, but my kids watched it occasionally. I cancelled the streaming at the price hike. I liked the DVDs but the new releases were not really "new" and were always on a long wait. I just cancelled the DVDs.

Streaming and DVDs at the old price had value for me, but not for the new price.

Now I go to the local video store and rent the new releases on the day they come out.
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post #13 of 22
Quote:
Originally Posted by OriginalMacRat View Post

Hulu.

There's almost no current content available from Netflix streaming, but just about everything I want to watch is available on Hulu.

I guess that's a matter of personal preference. I've never tried Hulu plus but I have used regular Hulu before. The ads really put me off and Hulu seems to be more focused on tv series than on films. But like I said, it's a matter of personal preference.

Quote:
Originally Posted by OriginalMacRat View Post

Also what little I streamed from Netflix almost put me at the max for my internet monthly data cap while streaming from Hulu has never gotten me even half way to that cap.

That seems like a big plus for Netflix right there. I would like the highest quality streams available to me. I want Netflix to eat up as much bandwidth as possible. I find the HD streams on Netflix to be of very good quality, especially for something that is streaming.

If you have data caps, then obviously hi quality streams are not what you are looking for, but I don't think that most people have any data caps to worry about. I don't know anybody who lives nearby me who has data caps, and they're on different ISP's than I am on. Maybe it's a regional thing, or maybe you're Canadian or something. Living with data caps must be horrible, you have my condolences.
post #14 of 22
post #15 of 22
Quote:
Originally Posted by Sierrajeff View Post

Completely agree - for 1/15th the price of cable (or less, depending on your market) I get commercial-free streaming of TV and movies. I'd be willing to pay 2 or 3 times what I'm currently paying for streaming Netflix, and still be happy.

Granted it's not a complete collection of first-run material (especially for TV), but it's expanding all the time and I'm more than keeping myself occupied just catching up with old shows I never got to see the first time around - Mad Men, Tudors, the new Doctor Who, etc.

I cancelled my Netflix sub when the price went up. Mainly because of the relatively huge price increase and the fact there wasn't that much streaming content i wanted to watch from them anymore. It may be a replacement for cable/satellite for many but without live sports it will never be a replacement service for me.
post #16 of 22
This is a perfect example of a f'ed up CEO and poor leadership decision. How is he still the CEO? You simply don'y raise prices on customers and then tell them it's better for them and they don't even know it yet! Netflix isn't the only game in town and when you start to act like you are, that's when you'll get brought down to earth with cancellations.

The argument that content providers are raising their fee on Netflix is lost in all this because once again Netflix isn't the only game in town. Their bargaining chips against content providers aren't as strong as it should be. For Netflix to survive or even get back where they were before, they better think hard and reinvent themselves and fast.
post #17 of 22
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Originally Posted by strobe View Post


I assume this is bittorrent (judging by the icon's file name)?
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post #18 of 22
Quote:
Originally Posted by allmypeople View Post

WOW. What a downfall. Yikes.

I personally love my Netflix (Canada streaming) and never understood why people complained so much about the price change and cancelled. Netflix is still so cheap.

I like the company as a online pioneer in providing me content at a price that usually makes me skip the pirate bay. In fact, it was the first online content provider I ever paid for outside iTunes.

The problem with their instant streaming is that their selection was and is pitiful. You'll almost never get a decent new title on there. If you are lucky you'll see something from a year ago. Fortunately, you can sometimes get good television series.

Them separating/renaming DVD business *bad.

Them raising the price so drastically *bad. I cancelled the DVD side relatively soon thereafter as I wasn't using it enough to justify it.

I agree with others that their CEO needs to be gone.

In their defense, Netflix streaming does consume about 20% of the Internet bandwidth in the United States PLUS they must have huge shipping expenses for the DVD side. The operating costs involved with that must be tremendous.
post #19 of 22
Netflix is an example of something very good gone very bad. I only used their DVD service occasionally, streaming almost never so $12 or $13 a month was ok. I bailed in August, right before the price hike. Seems they had just had raised the price recently.....oh ya, they had in November or December. Then from $12 or $13 to $18 or $19.......no thanks!

They've already admitted the 'Seperating DVD's from Streaming' mistake, now it's time to admit the 60% price increase (2nd in less than a year) mistake and roll the prices back. Maybe they've lost so many people that they will never get back, BUT, I would go back if they would revert to the old price structure. ARE YOU LISTENING NETFLIX??? and Reed Hastings???

If not, Reed Hastings (who should be gone as CEO by now, what's wrong with that board? Are they BLIND???) and Netflix can pay the price of greed and stupidity.
post #20 of 22
Quote:
Originally Posted by allmypeople View Post

WOW. What a downfall. Yikes.

I personally love my Netflix (Canada streaming) and never understood why people complained so much about the price change and cancelled. Netflix is still so cheap.

I like the company as a online pioneer in providing me content at a price that usually makes me skip the pirate bay. In fact, it was the first online content provider I ever paid for outside iTunes.

I wonder if any company will snatch them up now that they're relatively cheap?

I like Netflix. Doubling the price, however, after a previous price hike about six months prior tends to get people pissed off. Mind you, I understand my price being raised, but doing it more then once a year and raising it dramatically upsets me. It would be another matter, if I felt the quality of content increased to match my monthly payments, but I think the quality of content is decreasing.

Moreover, I don't want to deal with two companies, two payment, and two different ques like Netflix said it was going to do.

It deserves to beat up. Kind of like HP announcing it was planning on selling's it PC business.
post #21 of 22
I do not have cable. The ESPN app on my X-Box, and free HD over the air broadcasting covers a lot sporting events.

Quote:
Originally Posted by faZZter View Post

I cancelled my Netflix sub when the price went up. Mainly because of the relatively huge price increase and the fact there wasn't that much streaming content i wanted to watch from them anymore. It may be a replacement for cable/satellite for many but without live sports it will never be a replacement service for me.
post #22 of 22
Quote:
Originally Posted by TBell View Post

I do not have cable. The ESPN app on my X-Box, and free HD over the air broadcasting covers a lot sporting events.

Yeah I think it is cool they have added the ESPN app (I have it too) but it still doesn't cut it as a satellite replacement if you love sports.
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