Tag Archives: nflx

Netflix Rate Hike To Be Key Test Of Its Pricing Power

Netflix ( NFLX ) will be putting its pricing power to the test next month as many long-time U.S. subscribers get hit with a price increase. Morgan Stanley analyst Benjamin Swinburne says the price hike will have little impact on Netflix’s U.S. subscriber churn rate. Netflix stock was down a fraction, below 105, in afternoon trading on the stock market today . “Our survey work is clear: Original programming drives member satisfaction, which we believe drives down churn and creates pricing power,” Swinburne said in a research report Thursday. Morgan Stanley’s most recent streaming video survey found that Netflix’s original programming strategy is gaining traction. About 45% of Netflix users surveyed cited original shows as a reason to subscribe and nearly 30% of all survey respondents stated Netflix offers the best original programming among subscription video-on-demand and premium TV networks — both healthy increases year-over-year, Swinburne said. Cowen analyst John Blackledge on Tuesday said he, too, believes original programming will help Netflix weather the upcoming price increase . Baird analyst William Power is more cautious. “While planned price increases should benefit overall revenue and help cover growing content costs, the potential churn impact has been a central question for many investors,” Power said in a report Thursday. Power rates Netflix stock as neutral with a price target of 115. Still, Power says the price increase will not have a big impact on subscriber numbers, citing Netflix’s compelling value proposition. Morgan Stanley estimates that 45% to 50% of Netflix paid domestic subscribers at the end of the first quarter still pay the grandfathered price of $7.99 a month. They’ll see an increase to the current price of $9.99 a month.

Yahoo Has Been In ‘Free Fall,’ Says Report; Bid Deadline Looms?

With initial bids reportedly due Monday, Yahoo ’s ( YHOO ) revenue and earnings are expected to decline this year, according to a report by tech news site Re/code on Wednesday. Re/code said it based its report on financial information being distributed by Yahoo’s bankers to help possible buyers figure out how much they might bid. Yahoo has reportedly gotten interest from as many as 40 groups who have until Monday to submit preliminary bids for Yahoo’s core business and Asian operations. The book of disclosure documents “shows a company in what has been a serious free fall,” said Re/code, citing sources interviewed. That “has many nervous about bidding.” A Yahoo spokesperson told IBD via email that the company had no comment about the report. Re/code said that, according to the documents, Yahoo estimates that 2016 revenue “is dropping close to 15% and earnings by over 20%. Those revenues, backing out traffic acquisition costs (TAC), are expected to decline from $4.4 billion in 2014 and $4.1 billion in 2015 — already down from previous years — to $3.5 billion in 2016; meanwhile, earnings before depreciation, taxes and amortization are moving from $1.4 billion in 2014 and just below $1 billion in 2015 to $750 million in 2016.” TAC refers to payments that Yahoo makes to other websites to carry its ads. Yahoo expects to have about 9,000 employees at the end of 2016 — down from 12,500 in 2014 and 10,500 in 2015 — while stock-based compensation remains “steady,” Re/code said. That could indicate that “CEO Marissa Mayer is loading up valued employees with outsize share grants to get them to stay,” the report said. Yahoo confirmed last week that Senior Vice President of Talent Acquisition and Development Sandy Gould will become the latest high-profile executive to leave the struggling Internet firm. Yahoo has recently implemented layoffs and begun the process of selling itself and spinning off its hefty stake in China e-commerce giant Alibaba Group ( BABA ), and is also in the midst of a proxy fight seeking to oust its entire board. Yahoo’s revenue growth has stalled for nearly a decade as ad dollars continue to slip away to rivals including Facebook ( FB ), Netflix ( NFLX ), Alphabet ( GOOGL )-subsidiary Google, and others that include high-profile startups Snapchat and Pinterest. Expressions of interest are pouring in from dozens of groups that are eyeing buying the struggling Web portal, with Verizon ( VZ ) rumored to be the most likely acquirer, said Monness Crespi Hardt analyst James Cakmak in an industry research report early last month. Yahoo stock lifted 0.7% in the stock market today , closing at 36.66. Sale or not, Yahoo is facing rough waters. In a letter charging the current board of Yahoo with failing to deliver results for its shareholders, activist investor Starboard Value announced that it wants to sweep out all of the ailing Web company’s nine directors and replace them with its own slate during Yahoo’s 2016 shareholder meeting later this year. The letter — from Starboard Value managing member Jeffrey Smith, one of Starboard’s slate of Yahoo board nominees — indicates that Starboard also doesn’t trust Yahoo’s current directors to perform in terms of either the strategic review of Yahoo’s core search and display-ad business or with the eventual fate of Yahoo’s 15% stake in Alibaba and Yahoo’s holdings in Yahoo Japan. Yahoo’s Asian assets — comprised of its Alibaba holdings and a 35.5% stake in Yahoo Japan — represent the vast majority of Yahoo’s $34.69 billion market value. Yahoo owns a 15% stake in Alibaba, or about 384 million shares. Last month, Monness Crespi estimated the value of Yahoo’s core assets at $3 billion to $4 billion. Alibaba stock closed up 1.8% Wednesday at 78.68. Verizon stock was about flat, closing at 53.52.

Here’s How Apple Could Up Its TV Game With Skinny Bundle On Hold

Loading the player… Apple ( AAPL ) has put plans for its own “skinny” streaming bundle on hold, but the tech giant could expand its presence in the television space with the acquisition of DVR maker TiVo ( TIVO ), according to an analyst with Albert Fried. Reports surfaced in late March that TiVo was in talks to be acquired by Rovi ( ROVI ), a supplier of interactive program guides. While the analyst says that deal has merits, a TiVo acquisition by a consumer electronics company like Apple, Amazon ( AMZN ) or Microsoft ( MSFT ) is more attractive. That’s because consumer electronics firms “can better market and develop TiVo and TiVo’s ability to sell to roughly 80 million (subscribers) could be better exploited.” TiVo shares jumped 23% on the buyout rumors to retake their downward-sloping 200-day line. The stock is now looking for support around that level, rising nearly 1% on the stock market today . TiVo is trading 20% below its 52-week high. Apple tried to retake its 200-day line in Monday’s session, but closed the day just below that level. The stock has now fallen back below the 110 price level, edging up 0.4% intraday. Shares are trading about 18% below their all-time high reached at the end of last August. Amazon rose 1.8% intraday, while Microsoft ticked 0.4% higher. Meanwhile, Starz ( STRZA ) announced Tuesday it’s launching its own over-the-top streaming service, joining Netflix, Time Warner ( TWX )-owned HBO, CBS ( CBS ) and others in the pursuit of capturing the cord-cutting audience. The $8.99-a-month Starz service undercuts that of Netflix ( NFLX ), which is raising its price by $2 to $9.99 in May for “grandfathered in” customers. Starz rose fractionally while Netflix dipped 0.5%.