Netflix Adds One Million New Customers, Earnings Beat The Street

Home video subscription service Netflix (NFLX) continued its pattern of back-to-back earnings surprises Wednesday, reporting 34% increase in second quarter profit. The company also added 1 million new subscribers.

Netflix said it earned $43.5 million, or 80 cents a share, compared with earnings of $32.4 million, or 54 cents, in the same period last year.

Wall Street expected earnings of 70 cents a share, with sales of $524 million. The only soft spot for Netflix was that its sales slightly missed estimates, coming in at $519 million.

The company has consistently added new subscribers each quarter, capitalizing on the demise of Blockbuster (BLOKA), which has been closing hundreds of its video stores across the country. An estimated 500 Blockbusters are expected to close this year, and many of those customers are turning to Netflix.

Netflix reported 14 million subscribers at the end of the first quarter and on Wednesday reported they are up to 15 million. The company offers DVDs through the mail or streaming over the Internet. Its subscription services cost between $9 and $17 per month.

Netflix is seeing increased competition from Coinstar's (CSTR) Redbox, which offers DVD's for $1, and streaming video service Hulu.com, which is jointly owned by Disney (DIS), General Electric (GE) and News Corp. (NWS).

Netflix's streaming video service is taking off, particularly since it became available through Nintendo's Wii video console.
This week, the company reported that it is expanding into Canada this fall with its streaming video service.

Netflix's stock price has more than doubled this year, reaching a 52-week high of $127.96. Its stock was falling in after-hours trading.