Posts Tagged ‘TV’

This Stock Is A Good Buying Opportunity

This Stock Is A Good Buying Opportunity

The company announced it would raise is subscription fee for new members in the coming months, but existing members will pay the current fee at least until the next year.

This move is likely to support the company’s subscriber growth, as additional revenue will be used to buy more exclusive content and generate more subscribers and revenue growth.

It is estimated that a $1 increase in average revenue/user for Netflix would result in an 84% rise in the company’s domestic operating profit to $1.61 billion by FY 2016.

Pacific Crest Securities also raised its price target on the company’s stock to $500, while the stock is currently trading around $372.90.

Netflix Inc. (NFLX) serves as an online television and movie streaming service. The company reported its Q1 FY 2014 results on April 21st, 2014 and disclosed that its worldwide streaming subscribers reached 48.4 million, meaning the company’s subscriber growth beat analysts’ forecasts for the quarter. As a result of this handsome growth in the company’s subscribers, the company also announced an upcoming price increase for the users of the company’s services as part of a solid Q1 FY 2014 earnings report. Therefore, in this article, I will discuss the company’s Q1 FY 2014 results, along with a discussion on the rise in subscription fees as announced by the company and its future outlook.

Recent Quarter ResultsThe company operates via three operating segments: domestic streaming, international streaming and domestic DVD. members count to around 35.7 million, as shown in the following chart. The 2.25 million increase in domestic members is also in line with the company’s management guidance for Q1 2014 additional members.

Source: NFLX Q1 14 Letter to Shareholders

The company’s number of international customers rose by 1.75 million in Q1 FY 2014 to 12.7 million, which is 150,000 members more than projected by the company earlier this year. The company’s international segment accounted for about 21% of the company’s total revenue in Q1 FY 2014. Netflix’s domestic DVD segment recorded a decline in its total and paid members in Q1 FY 2014, dropping to 6.7 million and 6.5 million respectively.

Source: NFLX Q1 14 Letter to Shareholders

The rise in the company’s streaming members caused the company to record a total revenue of $1.27 billion for the quarter, as shown in the chart above, that fully met the consensus estimate of $1.27 billion. This total revenue in Q1 FY 2014 is 24% higher than what was recorded in Q1 FY 2013. As far as the bottom line is concerned, the company’s $0.86 EPS recorded for Q1 FY 2014 is also higher than the analysts’ consensus estimate of $0.83. The $0.86 EPS also increased from the company’s guidance of $0.78 for Q1 FY 2014. During the same quarter last year, the company logged an EPS of $0.31.

The company’s Q1 FY 2014 free cash flow was $8 million, up from $5 million in Q4 FY 2013 and $42 million in Q1 FY 2013. The company’s streaming content obligations are at $7.1 billion, as reported for Q1 FY 2014, down from $7.3 billion at the end of Q4 FY 2013 and up from $5.7 billion in Q1 FY 2013.

The major contributor to the company’s financial performance in Q1 FY 2014 was the company’s rising stress on and success of high class programming, such as the Emmy award winning drama “House of Cards”. Netflix released all 13 episodes of the second season of “House of Cards” on February 14th, 2014, which was the middle of the company’s Q1 FY 2014.

Now let us discuss an important announcement made by the company while releasing its Q1 2014 financial results. This announcement is related to the upcoming increase in the subscription fees to be paid by the company’s subscribers.

Price Rise, Confidence in the Company’s Future, and RisksBoosted by an expanding list of paid members and profits that surpassed expectations in Q1 FY 2013, Netflix announced its plan to increase prices for new subscribers. In the next three months, probably before July of 2014, the company is looking forward to raising its prices by $1 or $2 for new members around the globe. The existing members are not likely to be affected by this move until a “generous time period”, according to the company, as monthly fees for the current members would remain at the present pricing at $7.99 or $11.99 for domestic subscribers for two stream or four stream tier subscriptions. Therefore, the company’s current 48.4 million streaming subscribers will continue to pay the current sum per month for at least the next year, according to Netflix CEO, Reed Hastings. That means admirers of the women’s prison series “Orange Is the New Black” will not face higher prices when that show will be back on June 6th, 2014.

According to the company plans, the company will utilize the additional receipts from new subscribers, who will pay higher prices to buy more shows and movies. Therefore, the internet video service company is about to raise its prices for the first time in three years to help pay for more internet video programming, such as its popular political drama “House of Cards.” According to the company’s CEO, the company is planning to gain from the bigger budget for new shows and movies that will bring in more subscribers to the company, and ultimately, more revenue.

In addition to these goals set by the company to be achieved by the price hike, the price increase also reveals rising confidence that original shows like the political drama “House of Cards” and high class movies will continue to attract new subscribers even at the higher price. The company is optimistic about its user growth, even with soccer’s FIFA World Cup starting in mid June 2014 that may turn out to be a distraction for the company’s subscribers. The company has projected a temporary slow down but positive user growth during that period.

As part of risk assessment, I will discuss what happened to the company when it previously tried to raise its price. The company experienced a decline in its customers three years ago, when it split its DVD by mail business from streaming, and increased prices by 60% for customers who desired to have both services. Netflix lost about 800,000 subscribers after the 2011 price hike was announced, upsetting investors so much that the company’s stock fell by more than 80%, before beginning to recover in August 2012.

But the current situation for the company is much better than what it was three years ago. Now, Netflix has established itself more as the internet’s equivalent of HBO, with a growing number of programs making it unique in its services. According to FBN Securities analyst Shebly Seyrafi, Netflix has “room to raise prices”, as the company is likely to see a lot of demand in the coming periods.

Moreover, the current hike in price of up to $2 will only add 25% to the company’s current price, rather than the 60% addition the company attempted to gain three years back. Additionally, the company is also providing its current subscribers a prolonged grace period by allowing them to use the company’s services at the current prices for at least a year. According to S Capital IQ analyst Tuna Amobi, the timing of the company’s current price hike proposal is not perilous, as the economy is also in better condition in comparison to how it was three years ago.

Investors will also be pleased to know that the prospects of price will bring in more revenue for Netflix. This is reflected in Netflix’s stock, that has surged $23.01, or 6.6%, to $371.50 in extended trading after the company announced its plans.

Bottom line and Competitive LandscapeAccording to Pacific Crest Securities’ recently published report, Netflix has a competitive edge in terms of price setting when matching the hours viewed to the average cost of traditional pay TV packages. The firm estimated that the average Netflix customer pays approximately 16 cents per hour, whereas the average pay TV viewer pays 50 cents per hour, that creates remarkable underlying pricing power in Netflix’s model. According to the firm’s analysts, a $1 increase in average revenue per user for Netflix would result in an 84% rise in the company’s domestic operating profit to $1.61 billion by FY 2016.

On the other hand, competition is also exerting more financial pressure on the company, as it has to deal with the rising costs of licensing videos for its service. (MSFT) and Yahoo Inc. (YHOO) that are looking forward to buying more internet video programming from Hollywood studios. Therefore, Wedbush Securities analyst Michael Pachter suggests that the company needs to raise its price in order to remain profitable. recently increased the price of its prime service by 25%, from $79 to $99 per annum. is charging $8.25 a month, that is 26 cents more than Netflix’s current streaming service charges. Hulu Plus, a smaller streaming video opponent of Netflix, is currently priced at $7.99 a month, that is equal to what Netflix currently charges.

Other players across the internet, such as Pandora Media Inc. (P) are also increasing the prices for their services in one way or another. Therefore, according to Mark Mahaney, the managing director of investment banking firm RBC Capital Markets, most of the consumers are likely to remain indifferent on spending an additional dollar or two a month for the quality and the quantity of content that Netflix offers.

Q2 FY 2014 Forecasts and Final TakeFor Q2 FY 2014, Netflix expects to earn $69 million in net income, or $1.12 per share, in comparison to analysts’ estimate of 98 cents. The company projects its Q2 FY 2014 worldwide streaming revenue to total $1.14 billion, while analysts expect the company to record a revenue of $1.32 billion.

Furthermore, another famous Netflix series, “Orange Is The New Black,” is coming back with new episodes on June 6th, 2014, that is the last month of Q2 FY 2014. With the support of this series, the company is expecting to attract 511,000 domestic subscribers from April 2014 through June 2014, before prices hike for new customers. Overall, the company expects to add 520,000 domestic (down from 630,000 during Q2 FY 2013) and 940,000 international streaming subscribers (up from 610,000 during Q2 FY 2013) respectively in Q2 FY 2014. Seasonal factors and the 2014 FIFA World Cup will also slow down the company’s subscriber growth in Q2 FY 2014.

Analysts at Pacific Crest recently upgraded Netflix’s shares from a sector “perform” rating to an “outperform” rating. They now have a $500 price target on the company’s stock, a rise from the previous price target of $346.57. The stock is currently trading around $372.90.

Will Microsoft’s Release Of Xbox One Trigger Another Rally

Will Microsoft’s Release Of Xbox One Trigger Another Rally

Microsoft (NYSE: MSFT) announced on May 21 the upcoming release of its new generation Xbox gaming console, the Xbox One. It will be packed with loads of breakthrough features that will probably raise the gaming entertainment standard to a higher level. The scheduled release date is not set yet, but it could be anytime later this year. While the Xbox One will surely rock the gaming console industry, will this be enough to trigger a rally of Microsoft shares?

For the past weeks, Microsoft rallied and gained 7% month to date. Year to date growth is a whopping 27%. The announcement on the upcoming release of Xbox One may further boost the current rally, but whether the actual launch will trigger another rally or not, that remains to be seen.

The gaming console is just a part of one major segment of Microsoft, which is the entertainment and devices division. This segment contributes about 12% of the total revenue and only 4% of the company’s net income. Aside from the Xbox 360 entertainment platform that includes the Xbox 360 games and Xbox Live, Skype and Windows Phone are part of the segment.

The major revenue drivers of Microsoft are the business division, the Windows division, and the server and tools division. The Microsoft business division is the main revenue and income contributor of the company. This division accounts for 30.8% of the company’s total revenue during the first quarter of 2013. It generated $6.319 billion during the period.

The main component of this segment is the Microsoft Office system, such as the Microsoft Office, the Office 365, Lync, and SharePoint. This contributes about 90% of the revenue of the division.

The entertainment and devices division, on the other hand, posted $2.531 billion in revenue for the quarter. The total revenue of Microsoft during the period was $20.489 billion, up 17.7% versus the year ago quarter revenue of $17.407 billion.

In terms of earnings, the Microsoft business division is still the major earnings driver. It posted $4.104 billion net income compared to the $342 million earnings of the entertainment and devices division. Microsoft’s net income for the quarter was $7.612 billion, up 19.4% compared to the previous year first quarter earnings of $6.374 billion.

But in spite of the minute contribution of the entertainment division relative to the business division, it is still a major segment of the company. Any dips and lows in sales and revenues can affect not only the financials of Microsoft but the share price, as well. That is why the upcoming release of Xbox One is an event to watch for, especially among the shareholders, as well as traders planning to invest on Microsoft shares.

Key Features of Microsoft Xbox OneOne of the major highlights of Xbox One is the all in one home entertainment system. With this feature, the Xbox One can be connected to the TV and to various devices.

It is further equipped with a fully redesigned Kinect camera that lets you control different devices through hand gestures and voice command. You can literally turn the game console on by just saying the word ‘Xbox On.’

The same is true if you want to check the local TV listings, or switch to games, movies, and music. You can also set the console to ‘snap mode’ that lets you run different programs altogether in one screen. It comes with a Blu ray drive, as well.

One major drawback of the new game console is its incompatibility to the previous Xbox versions. So it will not be able to run Xbox 360 games because the hardware platform is totally different. This will probably get negative reactions among die hard Xbox fans. However, the fully enhanced gaming entertainment that the next generation games will provide will arguably offset the drawback. Gamers will experience a new level of entertainment that will make them glued to their seats for more hours of gaming.

There will be a handful of new game titles coming up from EA and Activision (ATVI). This includes the Forza 5, UFC, FIFA 14, and NBA Live, among others. Activision will also release the ‘Call of Duty: Ghosts’ through Xbox One.

To further add spice to the excitement, Microsoft will tap on the expertise of the legendary movie maker Steven Spielberg to create ‘Halo: The Television Series.’ This will be aired exclusive only to Xbox One, giving game lovers all the more reasons to purchase the new game console for their entertainment needs.

The Gaming Console IndustryWhile many people are excited about the upcoming launch of Xbox One, the gaming console industry is slowly shrinking amid the rising popularity of Android games that come at cheaper prices. Console games cost an average of $60 per game. There is higher possibility that the price will go up to $70 per game for the next generation games that come with better quality.

The average costs of game apps, on the other hand, start from $0.99 to $20 per game, and people spend almost the same hours or even more playing games on their Android powered gadgets against game consoles.

Aside from price, mobile convenience sets Android games apart from console games. You can practically bring your games along with you wherever you go, and you can play your favorite games during idle times of the day. This is one thing that game consoles can’t provide.

These issues will remain a tough challenge for the declining game console industry, leading to sharp decline in sales of game consoles in the US. Total sales generated only about $4 billion, down 21% over the previous year. Likewise, console games suffered the same fate, shedding 18% from $11 billion in 2011 to roughly $9 billion in 2012.

According to a report, only about 29% of hard core gamers will make the purchase of the next generation console games of Microsoft or Sony once they are released. While this figure is not accurate given the fact that many will eventually be convinced to make the purchase once the exciting features are unveiled, this is a sign that foretells the declining interest on console games nowadays.

If the above data is used as a benchmark, the estimated increments in sales of the new Xbox will be minimal, and it may probably not significantly affect the future total revenue and earnings of Microsoft.

Remarkable decrease in revenue of the business division, as well as the Windows division and the servers and tools division, will have greater impact on the company’s financials. So, more focus must be given on the performances of these segments when evaluating the financials of Microsoft.

SummaryXbox One may have the best features one can get from a game console, but many game fanatics are now migrating to Android games due to lower costs and convenience. While the release of Xbox One later this year will boost the sales of entertainment and devices division of Microsoft, shares may go up for a while but not probably enough to gather adequate momentum to ignite another rally.

Source: Will Microsoft Release Of Xbox One Trigger Another Rally?

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. (More.)

FIFA World Cup 2014 qualifying schedule

FIFA World Cup 2014 qualifying schedule

USA vs Mexico, two sides desperate for points meet on the FIFA World Cup 2014 qualifying schedule, as live stream, TV and odds information for this pivotal showdown is available.

According to a Sept. 10 LA Times report, Columbus Crew Stadium in Columbus, Ohio, will be the site when the United States and Mexico battle for a trip to Brazil next summer. PT) live on ESPN. PT).

USA vs Mexico Live Stream Info

Soccer fans around the world can witness who’ll take one step closer to punching its ticket to 2014 Brasil. ESPN3 and Watch ESPN will handle live stream duties for tonight’s clash, online and free of charge, at the aforementioned TV times.

FIFA World Cup 2014: USA vs Mexico Betting Odds

On paper, these teams possess a wealth of talent and it would be difficult to envision the 2014 WC without either side. Having that said, soccer oddsmakers believe that Team USA is the favorite over Mexico tonight.

According to Las Vegas’ experts, the home squad’s chances of coming thru with a win are 29/20 [+130] compared to El Tri’s 7/4 [+190] odds of an upset.

The OVER/UNDER is set at a combined total of 2 goals, probabilities of a draw stand at 11/5 [+225] and alternate lines go as follows:

USA = 29/20 [+145]

Mexico + = 20/27 [ 185]

Don’t miss this epic clash of soccer superpowers on the brink of elimination. Watch this FIFA World Cup 2014 qualifying scheduled, USA vs Mexico match via live stream or TV. Also, leave your comments below: Should Team USA be the (odds) favorite tonight versus Mexico?

FIFA World Cup 2014 Qualifying DVR Replays

Missed some of the FIFA World Cup (qualifying) action? Courtesy of ESPN 3, soccer fans can now catch up on all international soccer matches from across the globe. Watch free high definition DVR Soccer replays at any time.