Netflix predicts 'remarkably strong quarter'
Shares rise 10% as service expands marketing effortsAt least there's one company thriving during the U.S. recession. In fact, business is so good at Netflix the company spent as much as 20% more on its marketing efforts than originally planned.
If the company hadn't, it would have "blown out" its quarterly earnings guidance, CFO Barry McCarthy told analysts Tuesday at the UBS Global Media and Communications Conference in New York.
Comparing Netflix to Wal-Mart, he said consumers seeking a more affordable way to enjoy movies have provided Netflix with a "remarkably strong quarter."
His remarks, coupled with a bullish analyst note Tuesday, had Netflix shares rocking 10% higher while the rest of the market sank. The analyst, Michael Olson from Piper Jaffray, noted that while traffic at Netflix is down 5% during the past nine weeks, traffic at Blockbuster's site is off 16%.
Trying to glean cable TV intelligence, the Netflix CFO was asked if he was seeing a large number of consumers canceling their pay-television service and relying on Netflix for their entertainment needs on the TV screen.
McCarthy was vague, but said his guess was that most new Netflix subscribers are supplementing their cable needs, not substituting them.
"In difficult times, people escape to the movies, and in this quarter they've been escaping to the Netflix service," he said.