Netflix Reports Jump in Streaming Users

Netflix Inc. added a better-than-expected 3.28 million streaming subscribers in the June quarter, as the video service continued to sacrifice profit amid an ambitious international expansion.

The company, based in Los Gatos, Calif., plans to expand service to 200 countries by the end of next year, with Japan, Portugal, Italy and Spain slated to join this fall. The most recently completed period represented the first full quarters in Australia and New Zealand.

Netflix's quarterly results, however, show the inherent risks associated with expanding operations and doing business abroad. Profit fell 63% in the quarter as costs increased to buy and create content, and the strong U.S. dollar lowers the value of revenue generated outside the U.S.

Netflix, the pioneer of Internet TV, faces increased competition as traditional media and technology companies add streaming services, including Comcast Corp., which said it plans to roll out a streaming service to its broadband subscribers this summer.

Shares, which started trading Wednesday at the new price reflecting the company's 7-for-1 stock split, surged 11% to $109 in late trading. Netflix, the pioneer of Internet TV, has been the S&P best performer this year, with shares more than doubling in price.

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Overall, Netflix reported a profit of $26.3 million, or 6 cents a share, down from $71 million, or 16 cents a share, a year earlier.

Revenue rose to $1.64 billion from $1.34 billion.

Before the stock split, Netflix had projected 26 cents a share on $1.47 billion in revenue. Analysts surveyed by Thomson Reuters recently projected four cents a share, accounting for the split, on $1.65 billion in revenue.

For the current quarter, Netflix projects profit of 7 cents a share, compared with the consensus of five cents a share.

Separately, Netflix said it would support Charter Communications Inc.'s deal to buy Time Warner Cable Inc. so long as Charter adheres to its new policy not to charge content companies and long-haul telecom carriers to interconnect to its network.

Though Netflix grudgingly struck a "paid" interconnection deal with Comcast early last year, it lashed out publicly against the practice of such charges and made the deal a cornerstone of its opposition to Comcast's ill-fated merger with Time Warner Cable.

(By Maria Armental)