Monday, August 09, 2010

Everybody’s Business - Netflix Stays One Step Ahead of Creative Destruction - NYTimes.com

A stark contrast

THERE is no way that a store with racks of movies can sell its wares for as little. Blockbuster’s same-store sales have declined steadily, even when including sales from its mail service and kiosks. It is closing hundreds of stores. Delisted from the New York Stock Exchange in July, the company’s stock is trading for around 17 cents on the pink sheets, down from $30 in May 2002, which is about when Netflix stock began publicly trading at $7.53.

Netflix now trades at around $118. But while Netflix’s DVD rentals are declining about 25 percent, year over year, according to analysts at Barclays Capital, there is little consternation among Wall Street analysts. The company is gaining subscribers at the rate of 50 percent a year, and some 60 percent of its customers are streaming movies, up from 37 percent just a year ago. It does, however, face competition from Amazon.com and Wal-Mart, and analysts expect Apple to enter the movie streaming business.

Everybody’s Business - Netflix Stays One Step Ahead of Creative Destruction - NYTimes.com

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