Stock Quotes in this Article: NFLX

NEW YORK (Trefis) -- Netflix (NFLX) is going to announce its fourth-quarter and full-year results on Wednesday, Jan. 25. As always, the earnings announcement is eagerly awaited given how the latter half of 2011 has fared for Netflix. The stock has done well in the New Year, and it will be interesting to see whether the trend continues after the earnings announcement.

Netflix reported net subscriber losses in Q3 2011 and, whether that has continued or not in Q4, is going to be a major aspect to watch out for. It will be interesting to see how competitors such as Amazon (AMZN), Dish Network's (DISH) Blockbuster and DVD rental company Redbox have affected Netflix's Q4 subscriber growth.

See our complete analysis for Netflix

By the end of Q3 2011, Netflix had around 21.8 million streaming subscribers domestically and close to 1.5 million internationally. This amounted to total streaming subscriber count of a little over 23 million. Our current estimates imply that Netflix may have more or less maintained domestic streaming subscribers in Q4 of 2011 and may have grown internationally.

Although there is no conclusive proof, Netflix's recent press release indicates that domestic subscriber losses might have continued, leading to decline in streaming subscribers as well. The company mentioned that it has more than 20 million subscribers globally. While this is a vague statement, it probably implies that global streaming subscriber count is very close to 20 million, as opposed to our estimates of more than 23 million subscribers. Therefore it will be important to see how the actual subscriber results turn out. Netflix's stock has primarily traded on this metric.

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    The company's press release concerning streaming of 2 billion hours of video may also be an act to create a positive tone to moderate the impact of continued subscriber losses.

    Investors should also look for an update on ongoing and future content deals, especially because the company's contract with Starz is near expiration. The company also launched its service in the U.K. and Ireland and content costs, along with subscriber growth, are likely to be two critical metrics this year that investors will look at.

    Although it's too early to make a judgment regarding Netflix's subscriber growth in the U.K., we expect it to offer some initial insights regarding the adoption. We will keep a keen eye on Netflix's content cost and subscriber guidance for the upcoming quarter.
    Our price estimate for Netflix stands at $126, implying a premium of more than 30% to the market price.

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