By Dawn C. Chmielewski
7:34 PM CST, January 23, 2013
Netflix Inc. ended a volatile year on a high note, beating expectations for revenue and subscriber growth in the fourth quarter, which ended Dec. 31 -- sparking a nearly 35% spike in the company's stock in after-hours trading.
Holiday sales of consumer electronics devices -- particularly Internet-connected smart TVs and tablets -- contributed to a "particularly strong" season for the subscription movie and TV service, Chief Executive Reed Hastings said in a note to shareholders.
"The rise of tablets, smartphones and smart TVs are very helpful to us," Hastings said during the earnings call with analysts. "They're really the beginning of the trend of an Internet-connected ecosystem of devices."
Netflix added more than 2 million customers to its U.S. streaming service, bringing the total domestic subscriptions to more than 27 million. It added another 1.8 million members from around the world, bringing the total number of subscribers to 33 million.
Its lucrative DVD-by-mail service continued to shed subscribers, losing about 380,000 in the quarter.
Revenues rose to $945 million in the fourth quarter, up nearly 8% from the same time a year ago. Although some on Wall Street expected Netflix to post a loss for the quarter, given the spending on global expansion and the pricey acquisition of exclusive new content from the Walt Disney Co. and Warner Bros., the company posted net income or $7.9 million, or 13 cents a share.
That compares with $35.2 million or 64 cents a share from the comparable period in 2011.
Netflix's stock soared $36.64 in after-hours trading to $139.90 a share. The stock had closed at $103.26 Wednesday.
The results come after a difficult few months, during which Netflix suffered a Christmas Eve outage of its Internet streaming service, the U.S. Securities and Exchange Commission raised questions about one of Hastings' Facebook posts and activist investor Carl Icahn announced his plans to take a 10% stake in Netflix.
The company also acknowledged an increasingly competitive domestic market, where Netflix faces intensifying competition from digital rivals Amazon Prime, Redbox Instant and Hulu.
Netflix continues to invest in exclusive content to differentiate its service -- including the deal that will allow it to offer Disney, Pixar, Marvel and Lucasfilm movies at a time when such movies have typically been found on premium cable TV networks. It also has invested in such high-profile original series as "House of Cards," created by director David Fincher and starring Kevin Spacey and Robin Wright.
All 13 episodes of the political thriller will debut Feb. 1 on the service.