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NET FLIX Free Resources
Netflix also expects fou...
Netflix also expects fourth-quarter earnings before interest, taxes, depreciation and amortization (EBITDA) to range from $6.5 million to $7.5 million, up from $5 million to $6.5 million. EBITDA is a common cash flow measure for developing companies.
The Netflix service allows subscribers to rent as many DVDs as they want for a monthly fee of $19.95.
Financial analysts called the fourth-quarter performance a near term positive, but continued to voice concern over longer-term issues such as major retailers entering the market and future video-on-demand services competing with Netflix.
``It's a great short-term indicator, but I still feel competitive pressures will weigh on the company'' in the future, said Raymond Jones of Delafield Hambrecht Inc.
The company cited the lower monthly ``churn'' rate among subscribers for the raised fourth-quarter outlook. It expects fourth-quarter churn to fall between 6 and 7 percent, down from earlier forecasts of 7 to 7.4 percent.
Churn is an important barometer for a subscriber service like Netflix because it measures the number of clients who cancel memberships compared with those that retain the service. A high churn rate, in general, leads companies to boost marketing costs in order to keep customers.
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