Netflix: Price Increase Just 'a Latte or Two'
Responding to apparent customer backlash over yesterday's price increases, an indifferent Netflix brushed off concerns, comparing the increases to the prices of day-to-day items.
We knew there would be some people who would be upset, said company spokesman Steve Swasey. To most people, it's a latte or two.
The company provoked consumer discontent across the Internet as it unveiled plans to raise prices on its movie-rental services, but many across the Street believe the move will bode well for the company in the long term.
The company said it would raise the Internet-plus-DVDs-in-the-mail plan from $9.99 per month to $15.98 per month late Tuesday.
While this may bode well for the company, analysts may be underestimating the churn rate, if the outrage online is any indication. Thousands of subscribers complained on Netflix's official blog with many threatening to cancel subscriptions, while over 40,000 negative comments have been posted to the company's Facebook page.
Who's genius idea is this crap? said one comment on the Netflix blog, which promised to cancel service. Your streaming selection sucks and the Red Box is looking better and better these days, referring to the in-grocery store DVD rental service.
Users also created other Facebook pages, expressing their discontent, and some even took to Twitter.
One posted #Dear Netflix, I want to still love you, but price hike + M.I.A. Dexter is making me rethink this relationship. Why would you do this to us?
The protests even got some backing from some smaller Wall Street firms.
Why annoy your customers now? asked Barton Crockett of Lazard Capital, given that the economics looked fine before, hence, there was no need to fix them.
Why couldn't Netflix have done what other subscription services do and walked up pricing over a few years, easing the shock? While Netflix can test new offers to new subs, it has limited ability to test price changes for existing subs, raising execution risk for a jarring change.
Most Investors rejoiced, however, sending shares up over 3 percent, and earning the plaudits of some Wall Street's financial analysts.
Goldman Sachs analyst Ingrid Chung told investors she believes Netflix's high-priced subs will stay put and pay a 20 percent to 30 percent increase in price. The number of streaming only subscribers in total will rise from 50 percent to 55 percent.
While it's true some users could leave the service, she believes the resultant boost to revenue, rising to an average of $11.96 per user per month, could withstand an 18 percent churn rate before churn would eliminate the benefits of higher revenue -- well within acceptable bounds.
Better yet, the new higher prices will shift users over to the streaming services even more quickly, Piper Jaffray's Michael Olson explained. Churn -- or the rate at which people leave the service -- would rise to 4.3 percent from 4, but that marginal uptick could send average revenue per user to $12 for Netflix, versus $11.27 now.
He raised his price target to $330 from $305.
Daily Wrap Up July 22 â€“ Finance
Bernanke: 'Monetary policy remains focused on fostering economic recovery'
Federal Reserve chairman, Ben Bernanke spoke Wednesday for a second day of testimony on the Fed's semiannual monetary policy report. Bernanke tried to assure members of congress that the economy was on the mend and that tackling the rising unemployment rate is one of the most difficult and challenging parts of our task at this point. The overall economic situation remains very poor, he said. The Fed expects the recovery to start off very slow and pick up speed over time, he said.
Morgan Stanley posts a $71 million second quarter loss
Morgan Stanley posted a $71 million loss for the second quarter, largely because of $245 million in integration costs. Excluding those costs, the group's profit before tax was $174 million. Last year for the same period, Morgan Stanley GWM posted a pre-tax income of $272 million and a $119 million pre-tax profit in the first quarter.
Ebay profits for second quarter fall
EBay Inc. on Wednesday reported a second quarter drop in profit of 29 percent as demand for the company's auction business dropped. Net profit was $327.3m, down 29% compared with the $460m made in the same period a year ago. Revenue also fell slightly, from $2.2bn to $2.1bn. Despite the reported loss the company still beat Wall Street expectations and its shares rose more than 3 percent.
Catholic Church Sexual Abuse Persists in Ireland, Report Says
The Irish Catholic Church is neglecting to investigate new allegations of sexual abuse, flaunting safeguards against pedophilia even as charges of systemic abuse engulfed the church.
According to the Cloyne Report, compiled by an independent investigative committee, details internal divisions over how to persecute sex crimes and a continued practice of covering up reported abuses. In 1996, the church introduced a set of guidelines laying out how priests were to report abuse to civil authorities, but the Cloyne Report revealed that those guidelines have largely been ignored.
That's the most horrifying aspect of this docuiment, Ireland's Minister for Children Frances Fitzgerald said at a news conference. This is not a catalogue of failure from a different era -- this is about Ireland now.
The report details complaints made against priests in the Cloyne Diocese between 1996 and 2009, none of them acted upon. It also implicates John Magee, the former bishop of the diocese, for having detached himself from the day to day management of child sexual abuse cases and making advances towards a young man.
Perhaps most damningly, the report describes how the Vatican sought directly to circumvent the requirements for reporting abuse. A 1997 letter to Irish bishops said that canon law, which allows cases to be appealed to the Vatican, superceded civil law.
EBay net, revenue beats Street, shares up 3 percent
Ebay Inc on Tuesday posted a quarterly net profit and revenue that beat Wall Street expectations, and shares rose more than 3 percent.
The company, which connects sellers and buyers online through auctions and fixed-price sales, gave a third-quarter profit forecast in line with analysts' estimates.
EBay also includes Web payments unit PayPal and Internet telephone company Skype, which it is trying to spin off, likely next year.
Second-quarter net profit was $327.3 million, or 25 cents per share, from $460 million, or 35 cents per share, a year earlier.
Excluding one-time items, eBay earned 37 cents per share, a penny above the 36 cents per share expected, on average, by analysts, according to Reuters Estimates.
Revenue fell 4 percent to $2.1 billion -- above the $1.99 billion, or 9 percent drop, expected by Wall Street. The company's marketplaces division saw a 14 percent drop in revenue while sales in fast-growing PayPal jumped 11 percent.
Sluggish growth at eBay's marketplaces division -- which began with online auctions but now encompasses classifieds, fixed price sales and shopping sites -- has kept shares of eBay pressured, and the company has pointed to fast-growing PayPal as its future growth driver.
Operating margins fell to 19.6 in the quarter from 24.8 percent a year earlier, the company said, hurt by the effect of the stronger U.S. dollar against foreign currencies.
EBay said it expects third-quarter adjusted earnings per share in a range of 34 to 36 cents per share, compared with the 35 cents per share expected by Wall Street.
Shares in eBay rose 3.3 percent to $20.10 after closing on the Nasdaq at $19.45, up 2.75 percent in the regular session.
(Reporting by Alexandria Sage; Editing by Gary Hill)
Debt Ceiling: Obama Wants Common Ground by Week’s End to Prevent Govt Shutdown
With the deadline to raise the debt ceiling edging closer President Barack Obama is demanding that there be common ground between budget negotiators by week's end so as to prevent the looming government shutdown.
A decision must be made before the Aug. 2 cutoff date or the U.S. government will go into default.
The U.S. has hit its $14.3 trillion debt ceiling in May. The debt ceiling needs to be raised by $2.4 trillion to last to the end of 2012.
It is reported that Obama is getting frustrated and has warned Republicans to not call my bluff before walking out of a budget negotiation session.
House Majority leader Eric Cantor told the New York Daily News that Obama became agitated before the warning Cantor who had said he would consider a short-term debt-limit hike.
But Obama has said that such a hike isn't the resolution to the problem the nation is now facing.
After session, Cantor told reporters that the meeting ended with the President abruptly walking out of the meeting, Cantor told reporters after the session. I know why he lost his temper. He's frustrated. We're all frustrated.
On Wednesday, Moody's Investors Service said it will review the government's credit rating, CBS reported. The CBS article also stated that Moody's noted there is a small but rising risk that the government will default on its debt.
Lower ratings would lead to some consequences that could include higher rates for mortgages, car loans and other debts.
On Wednesday, the Obama and top lawmakers spent almost two hours bargaining on spending cuts before he abruptly ended the session when Cantor urged the president to accept a short, months-long increase in debt. This short-term increase was proposed instead of one that would last until next year's presidential election.
But Obama said: Enough is enough. ... I'll see you all tomorrow, several officials told CBS.
The Florida home of Kate “Ma” BarkerStirling Sotherby's real estate advisor Mark Arnold holds a crime scene photo at the second floor of the home in Ocklawaha
The Florida home of Kate “Ma” BarkerLocated on Lake Weir, the home where Kate 'Ma' Barker was shot dead by the FBI in 1935 is up for sale and could fetch up to $1 million
The Florida home of Kate "Ma" Barker, matriarch of the infamous Barker gang from the "public enemy era," is currently up for sale.
Barker was famously gunned down at the house at 13250 East Highway C-25 on the morning of January 16, 1935, after her son, Arthur "Doc" Barker, was arrested in Chicago eight days earlier. A map found in his possession indicated that the other gang members were in Ocklawaha, Florida, where the home is located.
The two-story wood frame house, 62 miles northwest of Orlando, is calling for a sale price around $1 Million.
The home has reportedly been kept in the family since the infamous 1935 FBI raid that ended in "Ma" Barker's death. The home is said to still be contain the original bullet holes from the gun-fight in which the FBI reportedly fired 2,000 shots during a four-hour stand-off.
Agents had reportedly run out of ammunition before they entered the home to find that Barker had died in a curled-up position, her slippers on the floor nearby, beneath a bedroom window.
A report filed by the FBI indicates that Fred Barker died with 10 bullet holes in his left shoulder and chest, three bullets in his head, a steel Colt pistol underneath his body and four $1,000 bills folded in his pocket.
The upstairs and downstairs walls are reportedly littered with indentations and raised plaster patches where bullets hit, and at least one through-and-through bullet hole remains un-repaired on the staircase.
The house is 2,016 square feet (187 sq meters) with four bedrooms and 1 1/2 bathrooms. The sale includes 9.5 acres shaded by stands of old oak trees and 1.5 acres of sandy beach on Lake Weir, according to the Daily Mail.
The home, built in 1930 by Miami entrepreneur Carson Bradford, was described as the 'scene of the battle' by then FBI Director J. Edgar Hoover.
The 10-acre estate in southeast Marion County is being sold through Stirling Sotheby's International Realty.
'There's unbelievable interest around the world in crime memorabilia,' Roger Soderstrom, the broker who is conducting the sale told the Orlando Sentinel.
'What is remarkable is this family has preserved all of this through four generations and it's still there and it's in good shape,' Mark Arnold, an agent with Stirling Sotheby's International Realty, told the Daily Mail
'It just has a few bullet holes.'
Click "start" to check out pictures of the Kate "Ma" Barker home.