...Accounting Netflix, Inc.: A Financial Analysis Andrew Gaines This paper was written for Professor Bearden!s Financial Statement Analysis course. Netflix, Inc. is the leading provider of online movie rentals in the United States. Out of an approximate 12,000,000 online movie subscribers in 2008, subscribers to Netflix constituted about 9,400,000. The company has strong profitability ratios as revenues increased 13.2% from 2007 to 2008 and net income increased 24.6%. Netflix has higher costs of revenues than its competitor, Blockbuster Inc., but it has outperformed that company. Blockbuster experienced net losses in 2007 and 2008. Netflix!s current liabilities have increased to match revenue growth, while long-term liabilities have increased to recognize an increase in lease obligations. Equity decreased from 2007 to 2008 by 19.2% due to an increase in treasury stock. This financial statement analysis of Netflix, Inc. encompasses the years ending December 31 of 2006, 2007, and 2008. Financial data was gathered from the 2006, 2007, and 2008 10-K filings with the Securities and Exchange Commission (SEC) and the company!s 2009 Q-1 filing for its first quarter of 2009. Additional data was also taken from the company!s website: http://www. netflix.com. For comparative purposes, data was gathered from one of Netflix!s competitors, Blockbuster, Inc. Data for Blockbuster was gathered on it company website, http://www.blockbuster.com and its 2007 and 2008 10-K filings with the SEC. Industry data...
Words: 6240 - Pages: 25
...XM Radio Stock I chose Sirius XM Radio as one of my stocks because as I was reviewing the stocks I was going to pick for this project , I saw that Sirius XM Radio was doing rather well. Sirius XM Radio was founded in 1990 by Martine Rothblatt but officially became a big name in 2007 when it started being used in the production of popular cars such as Ford , Mercury , and Lincoln. Sirius is just a leading brand in satellite radio because it delivers absolutely the best quality service as I have personally experienced. Here is a picture of how dramatic the rise from 2007 to 2012 was in the Sirius XM radio stock. The EBAY Inc. Stock I chose EBAY as one of my stocks because I love ebay. Ebay is a great place to find really nice things for a really good price. Who wouldn’t want that ?!? Not only does it satisfy the public’s needs but it does phenomenal in the stock market. Ebay was founded in 1995 by Pierre Omidyar for the sole purpose of connecting people and trading goods and services. Ebay does so well because of the amount of partnerships it has with big names such as GM or Disney. Ebay is also used by certain stores who only sells things through ebay. Here is a picture of Ebay’s rise in stock prices from 2008 to 2012. The Netflix Inc. Stock I chose Netflix as one of the stocks for my report because I also love Netflix. All you pay is eight dollars a month for unlimited movies!! Its great! But , Netflix was founded...
Words: 587 - Pages: 3
...are an important aspect of a company. However, in their 2010 annual report, I did find out that one of the goals of Redbox is to be able to achieve satisfactory availability rates to meet consumer demand while also maximizing Redbox’s margins. Nonetheless, Redbox should provide its customers and the public with mission and vision statements. My recommended mission statement can be found in Exhibit 1. Redbox has been successful renting DVDs ”on-the-go”, however, just like the convenience drove customers to Redbox kiosks, new technology can drive them away. The upsurge of online streaming seems to be the new “thing”. In order to combat this problem Redbox needs to develop a streaming business that can compete with the likes of Netflix, Apple and other rivals (Redbox rivals can be found in Exhibit 2). If Redbox can accomplish this task, it will give Redbox further growth expansions providing them with a competitive advantage. Situation Synopsis (extended SWOT) A quick SWOT Analysis lays out Redbox’s standing: Strengths Weaknesses Cheap Rental Prices $1.20+tax Limited only to New DVD Releases More clients because of No membership fees Maintaining physical stock Various Locations Poor advertising 1st of its kind Limited functionality of machines Offers free DVD promotion rental 28-day delay of new releases No late fees to customers Opportunities: Threats PC Rental Games Netflix- best streaming service available Video Streaming Blockbuster Counsel...
Words: 2457 - Pages: 10
...Consultant report: “Netflix in 2011” Introduction In 2011 Netflix’s success suffered a sudden slowdown and a change of course. Not many months ago Hasting, founder and CEO of Netflix was nominated as the magazine’s business person in 2010 (Fortune magazine). In last seven years Netflix’s operating income and last year it even grew by about 38.83% (Exhibit 1). The slowdown was due to the fact that Hasting announced that Netflix would split in two companies, one for streaming video service (Netflix) and one for DVD service (Qwikster). The most part of consumers didn’t accept this change demonstrating their attachment to the company. Netflix stock started to decrease, and now Hasting has to face-‐off the situation, he has to find a way to manage this transition. Purpose of report (and recommendation) This reports aims to analyze the situation in 2011. -‐In first understand the...
Words: 1089 - Pages: 5
...Final Exam – August 2013 Part 1 – Analysis of Netflix 1. and 2. Brief Overview of Netflix’s Business Model In order to better understand Netflix’s business model, there are 3 topics discussed at here: 1) the current business model analysis based on Alex Osterwalder’s methodology; 2) the history of Netflix’s business model which will give us more insights of what happened to Netflix in the past, and where it will go in the future; 3) the challenges and issues of current business model. Current business model The following is the current business model canvas of Netflix. As we can see above, Netflix’s revenue comes from subscription fee. The quality of video content is very important for success of Netflix’s business model. Netflix also extend the span of devices which support streaming. The growth of international subscription is one of the key success factors measured by wall-street. History of Netflix’s business model At the same time, to understand the history of Netflix’s business model is also very important. Figure 1Numbe of Subscription Figure 1Numbe of Subscription At the time of 1997 when Netflix was found, it offers online movie rentals. At 1999, Netflix launches the subscription service, offering unlimited rentals for one low monthly subscription. Before 2007, Netflix uses mail to delivery DVD to customers. At 2007, Netflix introduces streaming, which allows members to instantly watch television shows and movies on their personal computers....
Words: 4917 - Pages: 20
... Disclosure Analysis Paper Netflix is a company that lets people have access to movies both threw online access and digital video disc formats. Netflix has many different selections that people can choose from depending on their movie needs and their budgets. Netflix is traded publicly company that is currently trading at $353.50 per share according to the Bloomberg Business Week (Netflix Inc (NFLX:NASDAQ GS), 2014). There are many disclosures that are included in the financial statements. Netflix considers investments in instruments purchased with an original maturity of 90 days or less to be cash equivalents. Netflix obtains content through streaming content license agreements, digital video disc direct purchases and digital video disc revenue sharing agreements with various content providers. The content distribution rights in order to stream TV shows, movies and original programming to subscribers’ TVs, computers and mobile devices are obtained by Netflix. The amortization of the streaming content library is classified in “Cost of revenues” on the Consolidated Statements of Operations and in the line item “Amortization of streaming content library” within net cash provided by operating activities on the Consolidated Statements of Cash Flows. Costs related to subtitles, dubbing, and closed captioning are capitalized in “Current content library, net” on the Consolidated Balance Sheets and amortized over the window of availability. Netflix acquires digital video disc content...
Words: 790 - Pages: 4
...Netflix Domestic Strategy Prepared for: Netflix Senior Management Reed Hastings, Co-Founder and CEO Kelly Bennett, Chief Marketing Officer Jonathan Friedland, Chief Communications Officer Bill Holmes, Chief Business Development Officer Neil Hunt, Chief Product Officer David Hyman, General Counsel Patty McCord, Chief Talent Officer Ted Sarandos, Chief Content Officer David Wells, Chief Financial Officer August 4, 2012 Through this report, our consulting team has taken the opportunity to analyze and provide recommendations for future domestic business strategy of Netflix. As expressed in the company’s founder’s conference last October, we would like to help you build upon your stated vision for the future including: • Becoming the best global entertainment distribution service • Licensing entertainment content around the world • Creating markets that are accessible to film makers • Helping content creators around the world to find a global audience We would also like to follow the nine values you use to guide your company: • Judgment • Productivity • Creativity • Intelligence • Honesty • Communication • Selflessness • Reliability • Passion In this report, we will address the following issues to provide a foundation for overcoming Netflix’s domestic challenges: I. Competitive Dynamics A. Key Competitors B. Competitive Response II. Strategic Management/Competitive Issues A. Key Strategic Issues B. Strategic...
Words: 3734 - Pages: 15
...Corporate Financial Analysis and Security Research of Netflix, Inc. [pic] . Finance 307, Professor Peter Lou GGU, Summer 2013 Table of Contents Business Description……………………………………………………………………….. 3 Industry Position and Business Model…………………………………………………… 4 Industry Analysis……………………………………………………………………………. 4 Historic Financial Analysis……………………………………………………………….. 5 Weighted Average Cost of Capital……………………………………………………….. 6 Financial Statement Analysis……………………………………………………………… 7 Bond Valuation I……………………………………………………………………………. 10 Bond Valuation II…………………………………………………………………………… 11 Stock Analysis……………………………………………………………………………….. 11 Off-balance Sheet Items……………………………………………………………………. 12 Revenue and Earnings Growth Analysis…………………………………………………. 12 Conclusion……………………………………………………………………………………. 13 Exhibit I……………………………………………………………………………………….. 14 References…………………………………………………………………………………….. 15 Business Description Below are some fast facts regarding Netflix and a quick history snapshot. |Fast Facts | |Founded |1997 | |Location |Los Gatos, CA | |Industry Sector |Internet Television...
Words: 3851 - Pages: 16
...Company Analysis: Netflix 04/28/2011 Executive Summary Netflix Inc is a by mail DVD rental company and online streaming video webpage service exclusive to its paying subscribers. There are currently 2,180 full-time employees that manage a company with more than 20 million clients (mergentonline.com). Netflix is known for its innovative and sustainable business model based on unlimited service for a flat fee subscription. It distributes DVDs and controls inventory efficiently, to a point where costumers are completely satisfied with the service received (Freed). Throughout the years, Netflix has been operating by providing DVDs by mail to costumer’s households from its strategically located shipping warehouses. Additionally, Netflix started to offer online video streaming in 2008 to expand their services and appeal to a younger audience. This shows how Netflix adjusts in changes in the industry. The video rental industry was slowly loosing its appeal, in which companies like Blockbuster Inc. and others had a hard time making a profit using the usual classic video rental method at physical stores. But Netflix did not suffer from the industry losing its appeal. Netflix’s source of revenue comes from the monthly fee its millions of subscribers pay. Even when the economic environment was not at its peak the last few years, Netflix managed to sustain growth. Its unlimited service plans has kept demand buoyant, and it is one of the few movie rental companies that profits go...
Words: 7650 - Pages: 31
...influence their own televi-sion program. Most TVs have the ability to install applications, like Netflix. Older screens can be updated by a small hardware player to get this capability. Usually living room video entertainment is done by traditional companies like the RTL group. The customer can switch the channels, but is not able to choose his program by a remote click. Netflix is the pioneer and market leader in the US in streaming and offers shows and movies by video on demand. New streaming companies will mix up the tradi-tional market. A kind of quantum leap infects the television screen. The conver-gence of technologies combines an internet stream on the classic television. Traditional companies, like RTL, should consider following a different another strategic management course than for example Netflix. This assignment analyzes the streaming market, the forces, threats and opportu-nities as a Macro Environment Analysis. It’s a fast growing business and has a huge potential. The company Netflix is screened by a Micro Environment Analysis to show their portfolio and key figures. In the targeting and positioning part, a possible way of a strategic corporate management is developed, by references on the analysis of Porter’s three generic strategies, Ansoff and Mintzberg. For the final conclusion the current strategy will be investigated and opportunities are shown. Netflix has still some unexploited possibilities to maximize the profit and demonstrate also their market...
Words: 7929 - Pages: 32
...or short Blockbuster stock at the time of the case (i.e., late 1990s)? How about Netflix? Why? Before we could answer the first question, status quo of video rental industry (hereinafter referred to as VRI) in late 90s, has to be introduced. In those days, Blockbuster was dominant company in VRI and video games industry, almost on the top of its glory with $ 4,4b total revenues in 1999 and little less than 40% of market share. They operated over 7,000 stores in the US, more than 2,000 stores in another 28 countries. Customers could choose from 2500 movie titles in every Blockbuster branch. Fee for renting the movie was from $ 3 to $ 4. (Shih, Kaufman, & Spinola, 2009; Blockbusters, 1999). On the other hand, in late 90s Netflix was relatively newly established private company. At the end of 1999, they had over one hundred thousand subscribers. Netflix provided only DVD video rental services, based on online ordering (through Netflix web page) by customers and subsequent mail delivery DVDs by the US postal service. Their total revenue was $ 6,6m. Netflix had only one distribution centrum based in Sunnyvale, California. Every DVD in the US was distributed from this place. Netflix new business model (announced at the beginning 2000) was (in 2013 still is) based on monthly subscription. Every customer could borrow 3 DVDs at the same time and they could pick whatever they like. Given that historical background, it is reasonable preferred long-term stock position for both companies...
Words: 1221 - Pages: 5
...1 Introduction of Qwikster – The Spinoff of Netflix 4 – 6 Implications 6 Commentary 7 Netflix’s Cancellation of Qwikster 7 Conclusion 8 References 9 INTRODUCTION Company Information Netflix Inc., established in 1997 and headquartered in Los Gatos, California offers internet subscription service, streaming television shows and movies. Subscribers of Netflix can watch unlimited television shows and movies streamed over the internet to their televisions, computers and mobile devices. Currently, Netflix offers DVD-by-mail (delivered directly to homes) only to its United States subscribers. The company obtains content from various studios and other content providers through fixed-fee licenses, revenue sharing agreements and direct purchases. Netflix markets its service through various channels...
Words: 1519 - Pages: 7
...We were on the “Oh, yeah, I forgot I was subscribing to that” plan. With the “Honey, we’ve had this National Geographic documentary DVD for two months — are we really going to watch it, or should we just send it back?” option. Then, in July, Netflix /quotes/zigman/87598 NFLX -7.37% tried to jack up the price of our subscription. Bad move. Why? Because it meant we noticed our subscription. Click to Play Has Netflix lost critical momentum? There were more woes for Netflix on Friday, as its shares fell another 5% and analysts continued to hammer on the drop management forecast in its U.S. subscriber base. Has Netflix lost critical momentum? Rex Crum reports. And so we cut it. It was only a few bucks. But there gets to be a point where you just get fed up leaking money at every pore. We already have two set-top boxes — from Apple and Roku — that allow us to stream videos on demand from a variety of different sources, including Amazon /quotes/zigman/63011 AMZN +1.00% , Apple /quotes/zigman/68270/quotes/nls/aapl AAPL -0.35% and Hulu, as well as Netflix. If I wanted to pay extra, I could get more of the same from Comcast /quotes/zigman/89307 CMCSA -0.35% as well. Apparently we weren’t alone in cutting our Netflix sub. The DVD rental and streaming company warned that the move was going to cost it a million subscribers. As recently as July 25, the company was expecting to have 25 million customers by the end of this month. Now it expects 24 million. That will actually...
Words: 495 - Pages: 2
...Hedge Fund Summary The Hedge Fund Project gave me an insight of what trading is like. In the beginning, I wanted to pursue this aggressively. It did not take long for me to realize I really had no idea what I was doing. I started to invest in large company stocks and waited. Returns were following the S&P and if I were to see results quicker I needed to risk more. I bought some small company stocks and realized they changed quite rapidly on a daily basis. I used a fundamental approach to picking my investments. Each week I would watch the news about company mergers or information that would affect certain stock prices. I also chose stocks that I knew would rise based on historical performance. Also, I chose companies that I personally like and use on a daily basis, like Costco and Target. My father has worked at CSX for years and I have an edge on getting information about the company from him (public of course). When it came to choosing more risky investments, I used Yahoo Finance and Google Finance as my tools to spot them. I choose poor performing stocks to buy and hope for a good turn around. It proved successful with Education Management. However for other stocks like Sequans, it performed very poorly. I was basically gambling on whether they would bounce back. I soon realized it is not so simple to trade in the markets from day to day. There really is no strategy on how to make money fast. Without considering the limitations of Stocktrak, I know I would be crushed...
Words: 1945 - Pages: 8
...Importance of Market Research Chris Ostorga University of Phoenix MKT/441 Marketing Research Angila Romious Nov. 6, 2013 Market research consist of any prearranged attempt to obtain information dealing with their target markets or consumer base. Market research plays a vital role in the business strategy and is used to continue competitiveness over the company’s competitors. One of the key roles to market research is to provide imperative information to categorize and evaluate the market need, size and competition. Market research is broken down into social and opinion research and is the organized assembly and explanation of information that involves individuals or groups that use statistics and a variety of analytical methods and or techniques of the chosen social sciences to obtain some sort of perception in order to support decision making. For many businesses market research involves discovering the needs, wants, and believes, of the targeted market. This can also involve the discovery of how the targeted market audience’s actions or reactions to a product. The two types of research that are conducted during the market research period are primary research that is divided into two categories which is quantitative and qualitative research and the second type of research being secondary research. Primary research focuses merely on the collection of original primary data. It is usually gathered after the researcher has obtained some understanding or awareness into...
Words: 774 - Pages: 4
