Netflix US Streaming Business Grows, Plans Subscription Price Hike

 
on April 21 2014 5:16 PM
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Netflix interface upgrade will improve user experience. Courtesy/Creative Commons

(Reuters) - Video streaming service Netflix Inc. reported higher profit that beat Wall Street expectations and said it intends to raise the monthly subscription price for new customers, sending its stock up 6.5 percent in after-hours trading.

Net income for the quarter that ended in March reached $53 million, Netflix said on Monday, an increase from $3 million a year earlier. Earnings-per-share came in at 86 cents, topping the average forecast of 83 cents, according to analysts surveyed by Thomson Reuters I/B/E/S.

Netflix said it added 2.25 million customers to its U.S. streaming business during the quarter, in line with the company's earlier guidance.

The company, in a quarterly letter to shareholders, said it plans to impose "a one or two dollar increase, depending on the country, later this quarter for new members only." It did not name the countries. Existing customers would keep their current price "for a generous time period," it said.

Shares of the company jumped 6.5 percent to $371.26 in after-hours trading, up from their earlier close of $348.49 on Nasdaq.

At the end of March, Netflix reported 35.7 million U.S. streaming subscribers. In international markets, its customer base reached 12.7 million, a gain of 1.8 million during the quarter.

"It was an impressive quarter," FBN Securities analyst Shebly Seyrafi said. "They came through on the bottom line and the net subscriber ads were solid."

The company has "room to raise prices" because "they're still seeing a lot of demand" for the service, Seyrafi said.

Netflix suffered from a consumer backlash and stock plunge after it announced an unpopular price increase in July 2011. nL2N0ND154

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