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Netflix(NFLX) Risk Factors-DUH! One of the sections in every 10-K and 10-Q report is the "Risk Factors" section. Companies are required to give an honest assessment of factors which might impact their business results. I sometimes find reading them is like reading the disclaimers in magazine drug advertisements. They convey the worst possible scenario situations and if you are not careful, can scare you away from investing in anything. Sometimes, however, they are just kind of funny. Here is the risk factors section from the Netflix 10-Q report that was just released.
There have been no material changes from the risk factors as previously disclosed under the heading "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2010, except for the following additional Risk Factor: If we are unable to recover from the negative consumer reaction to our price change and other announcements made during the third quarter of 2011, our business will be adversely affected. In the third quarter of 2011, we made a series of announcements regarding our business, including the separation of our unlimited DVD by mail and unlimited streaming plans with a corresponding price change for some of our customers, the rebranding of our DVD by mail service, and the subsequent retraction of our plans to rebrand our DVD by mail service. Consumers reacted negatively to these announcements, adversely impacting our brand and resulting in higher than expected customer cancellations and a decline in net subscriber additions. These adverse effects, coupled with the increasingly long-term and fixed-cost nature of our content acquisition licenses, will likely continue to have an adverse impact on our results of operations. If we are unable to repair the damage to our brand and reverse negative subscriber growth within our domestic segment, our results of operations, including cash flow, will be adversely affected.
DUH. No Kidding!
-- Laurie Frederiksen Become our Facebook friend! www.facebook.com/bivio Follow us on twitter! www.twitter.com/bivio |
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