Netflix Inc on Tuesday posted its weakest subscriber gains in four years as streaming competition increased, COVID-19 pandemic restrictions eased and live sports returned to television.
The company added 2.2 million paid subscribers globally during the quarter that ended on Sept. 30, missing Wall Street’s target of 3.4 million and its own forecast.
Earnings per share also landed below analyst expectations at US$1.74. The consensus forecast was US$2.14, according to IBES data from Refinitiv.
Photo: AP
Shares of Netflix, one of the biggest gainers this year as people stayed home amid the pandemic, dropped nearly 6 percent to US$494 in after-hours trading on Tuesday.
“Domestic subscribers were nearly flat, which highlights Netflix’s saturation in the US,” said Ross Benes, an analyst with eMarketer.
With additions slowing in the US, revenue growth will likely come from price increases, he said.
The company reported a blockbuster quarter at the start of the pandemic, adding 15.8 million paying customers from January through March.
Netflix had warned investors that a sudden surge in new sign-ups would fade in the latter half of the year as COVID-19 restrictions eased. Netflix forecast that in the fourth quarter, it would bring in 6 million new subscribers worldwide, short of the 6.51 million that analysts expected.
The video streaming pioneer is trying to win new customers and fend off competition as viewers embrace online entertainment. During the third quarter, Netflix released Emily in Paris, Enola Holmes and The Devil All the Time.
Netflix acknowledged that competition was increasing as studios across Hollywood from Walt Disney Co to AT&T Inc’s WarnerMedia have restructured to compete more directly for video subscribers.
“Competition for consumers’ time and engagement remains vibrant,” Netflix said in a letter to shareholders.
In the past few months, major sports resumed play and nascent streaming services, including AT&T’s HBO Max and Comcast Corp’s Peacock, offered audiences new options.
Netflix said its results reflected the fact that it saw such a big surge in customers early in the year.
“We continue to view quarter-to-quarter fluctuations in paid net adds as not that meaningful in the context of the long run adoption of internet entertainment, which we believe is still early and should provide us with many years of strong future growth as we continue to improve our service,” the company said.
Netflix officials noted that the company had pulled in more subscribers in the first nine months of the year than in all of last year. It ended the third quarter with 195.2 million global streaming customers.
“Next time we get together, we should be over 200 million members, completing a year of 34 million [additions],” an annual record, cochief executive Reed Hastings said in an analyst interview.
The company also said it expected to complete shooting over 150 productions by the end of the year and that it would release more original programming in each quarter of next year compared with this year.
Revenue rose 22.7 percent to US$6.44 billion in the third quarter, edging past estimates of US$6.38 billion.
Net income rose to US$790 million, or US$1.74 per share, in the quarter from US$665.2 million, or US$1.47 per share, a year earlier.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to