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Netflix shares surge as customer base grows

Netflix Inc.'s fourth-quarter revenue outpaced Wall Street's expectations as the video rental website reversed subscriber losses to sign up more than 600,000 new U.S. customers in the period, pushing its shares up 13 percent.
Netflix's Chief Executive Officer Reed Hastings speaks during an interview with Reuters in Buenos Aires
Netflix's Chief Executive Officer Reed Hastings Enrique Marcarian / X00175
/ Source: Reuters

Netflix Inc's fourth-quarter revenue outpaced Wall Street's expectations as the video rental website reversed subscriber losses to sign up more than 600,000 new U.S. customers in the period, pushing its shares up 13 percent.

Netflix, which revolutionized the home video industry but in 2011 outraged customers with a surprise price hike and a botched attempt to split off its DVD-mail service, posted a 47 percent leap in fourth-quarter revenue to $876 million.

That outpaced an average forecast for $857.9 million, according to Thomson Reuters I/B/E/S. Earnings per share hit 73 cents, beating an average forecast of 55 cents.

B. Riley & Co analyst Eric Wold said Netflix delivered the reassurance Wall Street was seeking that the company was winning new customers and wasn't hurt by its growing competition.

Wold said the number of U.S. streaming subscribers came in higher than expected, and the net loss Netflix is predicting for this year's first quarter as it expands internationally was lower than many projected. "It shows in my mind that the impact of Q3 and Q4 was temporary," he said.

"They have a very strong position. I think that's going to be comforting to people," Wold added.

Netflix lost more than 800,000 U.S. customers in the third quarter of 2011 after an uproar over a price hike and now-aborted plan to rent DVDs under the name Qwikster. The company's share price plummeted from $304 in July to $62 in November.

Shares rose 13 percent to trade above $107 in after-hours trading following the earnings report. They had ended at $95.04, up 2.6 percent, in the regular session on Nasdaq.