Online mail-order DVD rental leader Netflix, announced it nearly tripled its profits for the second quarter. However investors were unconvinced, as the company's stock price spiked steeply lower in after hours trading.

The Los Gatos, Calif. based company announced a net profit increase of 194 percent to reach $16.8 million from $5.7 million in earnings for the same period last year. Its earnings per share (EPS) also nearly tripled from $0.09 to $0.24. The firm surpassed an EPS forecast of 18 cents from Thompson Financial.

Revenue for the second quarter of 2006 was $239.4 million, representing an increase of 46 percent from $164.0 million, a year ago. The increase of revenue was attributed to a boost in subscribers.

By the end of the second quarter, Netflix had finally reached its coveted prize of 5 million subscribers which it set out for in 2004. As of this quarter, its customers had risen 62 percent from 3 million to 5 million.

Two black spots still remained for Netflix. The cancellation rate had increased from 4.3 percent to 4.7 percent. The second was the increase competition from its rival Blockbuster which was offering the similar deals on rentals. Netflix and Blockbuster have filed opposing lawsuits against each other over patent issues regarding patented methods for renting videos online.

A looming threat for the Netflix is Video on Demand (VOD), which allows users to download their movie instead of ordering from Netflix which still took days.

In after hours trading after its NASDAQ close of $23.76, Netflix lost nearly 20 percent, or $4.86.