Netflix (NFLX $140.25 +36.99) reported fourth quarter earnings of $0.13 per share, $0.27 better than the Capital IQ consensus of ($0.14), while revenues rose 7.9% year/year to $945 million versus the $934.85 million consensus. The company issued upside guidance for Q1, sees EPS of $0.00-0.23 vs. ($0.09) Capital IQ Consensus Estimate; sees Q1 revs of $1.004-1.031 bln vs. $970.10 million Capital IQ Consensus Estimate. 'We added more than 2 million members in Q4 to end the year with over 27 million domestic members. Our holiday season was particularly strong, driven by consumers buying new electronic devices, including tablets and smart TVs. Both voluntary and involuntary retention improved in Q4. The increase in involuntary retention was due to improvements in how we process payments and recover those members on payment hold. We believe the gains in voluntary retention stemmed from steady improvements in service and content relative to the broad array of video choices available to consumers, as shown by the continued growth in our median hours viewed per member'. Netflix Q4 Metrics Domestic Streaming Total Subs Q4 27.15 million vs Guidance 26.4-27.1 million Paid Subs Q4 25.4 million vs Guidance 24.9-25.4 million Revenue Q4 $589 million vs Guidance $581-588 million Contribution Profit $109mln vs Guidance $94-102 million Contribution Margin Q4 18.5% vs Guidance 17% 'Our target remains to expand contribution margin on average about 100 basis points per quarter. We anticipate domestic streaming contribution profit will, for the first time ever, be larger than DVD contribution profit (and up about 90% year over year) in Q1'. International Streaming Paid Subs Q4 6.12 million vs Guidance 4.23-4.75 million Revenue Q4 $101mln vs Guidance $90-100 million Contribution Loss ($105 million) vs Guidance ($119 million) to ($107 million) 'Over the course of this year, we expect to see declining losses in our current international markets as member growth exceeds growth in content spending. With a Q1 guidance midpoint of $87 million in international losses, we expect a sequential improvement of $18 million, with more modest sequential improvements expected in subsequent quarters. For the first half of 2013, we aren't planning to launch additional international markets. We are evaluating several expansion markets for late 2013 or 2014, but have not made any decisions yet. Our launch in the Nordics was very successful, confirming our belief in the large international opportunity for our service. In Latin America, we've made steady progress on our consumer payment infrastructure'. Domestic DVD Total Subs 8.22 million vs Guidance 7.85-8.15 million Revenues Q4 $254 million vs $248-255 million Consolidated Global Net Income Q4 $8 million vs Guidance ($13.2 million) to $2 million EPS Q4 $0.13 vs Guidance ($0.23) to $0.04 'The US Postal Service is under financial stress, but we don't foresee service changes this year that have a material negative impact upon us or our members' Netflix Q1 Guidance Domestic Streaming Total Subs Q1 28.5-29.2 million Paid Subs Q1 27.5-29.2 million Revenue Q1 $633-641 million Contribution Profit Q1 $122-130 million International Streaming Total Subs Q1 6.6-7.3 million Paid Subs Q1 5.8-6.4 million Revenue Q1 $132-144 million Contribution Loss Q1 ($94-80 million) Domestic DVD Total Subs Q1 7.6-8.5 million Revenues Q1 $239-246 million Consolidated Global Net Income Q1 $0-14 million EPS Q1 $0.00-0.23 Carl Icahn 'Carl Icahn became a 10% investor last quarter at approximately $58 per share. We have no further news about his intentions, but have had constructive conversations with him about building a more valuable company'.

Netflix (NFLX $140.25 +36.99) reported fourth quarter earnings of $0.13 per share, $0.27 better than the Capital IQ consensus of ($0.14), while