• Jeff Matthews

Why Do They Ask These Questions?


I listened to the Netflix earnings call last night. Or was it the Blockbuster earnings call?

Forgive me—I got confused, because Netflix’s management actually spent more time talking about Blockbuster than about Netflix, or at least it seemed that way.

It seemed that way because Netflix management said “Blockbuster” 17 times during their remarks, but only referred to their own company 11 times.

Now, the Netflix team has a right to be overtly obsessed with Blockbuster, if the fact that Netflix’s subscriber base actually declined during the quarter, despite the company spending $47 million in the quarter to attract new subscribers, is any indication.

In years past, Netflix’s management used to wow Wall Street’s Finest with, and I quote CEO Reed Hastings here,

“…the promise of generating consistent, 50% earnings growth year-after-year over the next several years”

Which is probably why—despite Blockbuster’s recent moves, not to mention the video iPod, YouTube and all the other alternatives to ordering DVDs through the U.S. Post Office—the CFO’s comment that he doesn’t “see it [2008 EPS] being any higher than the current year” was such a shock in certain quarters.

And that shock is the only reason I can think of for the following exchange, between one of Wall Street’s Finest, and Netflix CFO Barry McCarthy, about the recent 2c postal rate increase, courtesy of the indispensable Street Events:

Brian Pitz – Bank of America …Can you talk about going forward, how we should think about the increased costs of mail on a full quarter basis? Thanks. Barry McCarthy On a per-disc-shipped basis, it’s about $0.04, $0.02 each way….

How should we think about analysts asking what 2 + 2 equals? I have my own opinion, but this is a family publication…

Jeff Matthews I Am Not Making This Up © 2007 NotMakingThisUp, LLC

The content contained in this blog represents the opinions of Mr. Matthews. Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author.

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