NFLX » Topics » Our stock price is volatile.

These excerpts taken from the NFLX 10-K filed Feb 25, 2009.

Our stock price is volatile.

The price at which our common stock has traded since our May 2002 initial public offering has fluctuated significantly. The price may continue to be volatile due to a number of factors including the following, some of which are beyond our control:

 

   

variations in our operating results;

 

   

variations between our actual operating results and the expectations of securities analysts, investors and the financial community;

 

   

announcements of developments affecting our business, systems or expansion plans by us or others;

 

   

competition, including the introduction of new competitors, their pricing strategies and services;

 

   

market volatility in general;

 

   

the level of demand for our stock, including the amount of short interest in our stock; and

 

   

the operating results of our competitors.

As a result of these and other factors, investors in our common stock may not be able to resell their shares at or above their original purchase price.

 

19


Table of Contents

Following certain periods of volatility in the market price of our securities, we became the subject of securities litigation. We may experience more such litigation following future periods of volatility. This type of litigation may result in substantial costs and a diversion of management’s attention and resources.

Our stock price is volatile.

The price at which our common stock has traded since our May 2002 initial public offering has fluctuated significantly. The price may continue to be volatile due to a number of factors including the following, some of which are beyond our control:

 

   

variations in our operating results;

 

   

variations between our actual operating results and the expectations of securities analysts, investors and the financial community;

 

   

announcements of developments affecting our business, systems or expansion plans by us or others;

 

   

competition, including the introduction of new competitors, their pricing strategies and services;

 

   

market volatility in general;

 

   

the level of demand for our stock, including the amount of short interest in our stock; and

 

   

the operating results of our competitors.

As a result of these and other factors, investors in our common stock may not be able to resell their shares at or above their original purchase price.

 

19


Table of Contents

Following certain periods of volatility in the market price of our securities, we became the subject of securities litigation. We may experience more such litigation following future periods of volatility. This type of litigation may result in substantial costs and a diversion of management’s attention and resources.

Our stock price is volatile.

FACE="Times New Roman" SIZE="2">The price at which our common stock has traded since our May 2002 initial public offering has fluctuated significantly. The price may continue to be volatile due to a number of factors including the following, some of
which are beyond our control:

 







  

variations in our operating results;

 







  

variations between our actual operating results and the expectations of securities analysts, investors and the financial community;

STYLE="font-size:6px;margin-top:0px;margin-bottom:0px"> 







  

announcements of developments affecting our business, systems or expansion plans by us or others;

STYLE="font-size:6px;margin-top:0px;margin-bottom:0px"> 







  

competition, including the introduction of new competitors, their pricing strategies and services;

STYLE="font-size:6px;margin-top:0px;margin-bottom:0px"> 







  

market volatility in general;

 







  

the level of demand for our stock, including the amount of short interest in our stock; and

STYLE="font-size:6px;margin-top:0px;margin-bottom:0px"> 







  

the operating results of our competitors.

SIZE="2">As a result of these and other factors, investors in our common stock may not be able to resell their shares at or above their original purchase price.

 



19







Table of Contents


Following certain periods of volatility in the market price of our securities, we became the subject of
securities litigation. We may experience more such litigation following future periods of volatility. This type of litigation may result in substantial costs and a diversion of management’s attention and resources.

STYLE="margin-top:18px;margin-bottom:0px">We record substantial expenses related to our issuance of stock options that may have a material negative impact on our operating results for the foreseeable future.

Our stock-based compensation expenses totaled $12.3 million, $12.0 million and $12.7 million during 2008, 2007 and 2006, respectively.
We expect our stock-based compensation expenses will continue to be significant in future periods, which will have an adverse impact on our operating results. The lattice-binomial model used by us requires the input of highly subjective assumptions,
including the option’s price volatility of the underlying stock. If facts and circumstances change and we employ different assumptions for estimating stock-based compensation expense in future periods, or if we decide to use a different
valuation model, the future period expenses may differ significantly from what we have recorded in the current period and could materially affect the fair value estimate of stock-based payments, our operating income, net income and net income per
share.

Financial forecasting by us and financial analysts who may publish estimates of our performance may differ materially from actual results.

Given the dynamic nature of our business, the current uncertain economic climate and the inherent limitations in predicting the future,
forecasts of our revenues, gross margin, operating expenses, number of paying subscribers, number of DVDs shipped per day and other financial and operating data may differ materially from actual results. Such discrepancies could cause a decline in
the trading price of our common stock.

 





Item 1B.Unresolved Staff Comments

None.

STYLE="font-size:18px;margin-top:0px;margin-bottom:0px"> 





Item 2.Properties

We do not own any real estate. The
following table sets forth the location, approximate square footage, lease expiration and the primary use of each of our principal properties:

 




























































Location

  Estimated
Square
Footage
  Lease
Expiration Date
  

Primary Use

Los Gatos, California

  165,000  March 2013  

Corporate office, general and administrative, marketing and technology and development

Sunnyvale, California

  115,000  April 2009  

Receiving and storage center, processing and shipping center for the San Francisco Bay Area

Columbus, Ohio

  90,000  July 2016  

Receiving and storage center, processing and shipping center for the Columbus Area

Hillsboro, Oregon

  49,000  April 2011  

Customer service center

Beverly Hills, California

  20,000  August 2010  

Content acquisition, general and administrative

We operate a nationwide network of distribution centers that serve major metropolitan areas
throughout the United States. These fulfillment centers are under lease agreements that expire at various dates through July 2016. We also operate a data center in a leased third-party facility in Santa Clara, California.

STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%">In the second quarter of 2009, our central receiving and storage center will be moved from its current location in Sunnyvale, California to Columbus,
Ohio. We believe our properties are suitable and adequate for our present needs, and we periodically evaluate whether additional facilities are necessary.

 


20







Table of Contents






Item 3.Legal Proceedings

Information with respect to this
item may be found in Note 5 of the Notes to the Consolidated Financial Statements in Item 8, which information is incorporated herein by reference.

 





Item 4.Submission of Matters to a Vote of Securities Holders

SIZE="2">None.

 


21







Table of Contents


Our stock price is volatile.

FACE="Times New Roman" SIZE="2">The price at which our common stock has traded since our May 2002 initial public offering has fluctuated significantly. The price may continue to be volatile due to a number of factors including the following, some of
which are beyond our control:

 







  

variations in our operating results;

 







  

variations between our actual operating results and the expectations of securities analysts, investors and the financial community;

STYLE="font-size:6px;margin-top:0px;margin-bottom:0px"> 







  

announcements of developments affecting our business, systems or expansion plans by us or others;

STYLE="font-size:6px;margin-top:0px;margin-bottom:0px"> 







  

competition, including the introduction of new competitors, their pricing strategies and services;

STYLE="font-size:6px;margin-top:0px;margin-bottom:0px"> 







  

market volatility in general;

 







  

the level of demand for our stock, including the amount of short interest in our stock; and

STYLE="font-size:6px;margin-top:0px;margin-bottom:0px"> 







  

the operating results of our competitors.

SIZE="2">As a result of these and other factors, investors in our common stock may not be able to resell their shares at or above their original purchase price.

 



19







Table of Contents


Following certain periods of volatility in the market price of our securities, we became the subject of
securities litigation. We may experience more such litigation following future periods of volatility. This type of litigation may result in substantial costs and a diversion of management’s attention and resources.

STYLE="margin-top:18px;margin-bottom:0px">We record substantial expenses related to our issuance of stock options that may have a material negative impact on our operating results for the foreseeable future.

Our stock-based compensation expenses totaled $12.3 million, $12.0 million and $12.7 million during 2008, 2007 and 2006, respectively.
We expect our stock-based compensation expenses will continue to be significant in future periods, which will have an adverse impact on our operating results. The lattice-binomial model used by us requires the input of highly subjective assumptions,
including the option’s price volatility of the underlying stock. If facts and circumstances change and we employ different assumptions for estimating stock-based compensation expense in future periods, or if we decide to use a different
valuation model, the future period expenses may differ significantly from what we have recorded in the current period and could materially affect the fair value estimate of stock-based payments, our operating income, net income and net income per
share.

Financial forecasting by us and financial analysts who may publish estimates of our performance may differ materially from actual results.

Given the dynamic nature of our business, the current uncertain economic climate and the inherent limitations in predicting the future,
forecasts of our revenues, gross margin, operating expenses, number of paying subscribers, number of DVDs shipped per day and other financial and operating data may differ materially from actual results. Such discrepancies could cause a decline in
the trading price of our common stock.

 





Item 1B.Unresolved Staff Comments

None.

STYLE="font-size:18px;margin-top:0px;margin-bottom:0px"> 





Item 2.Properties

We do not own any real estate. The
following table sets forth the location, approximate square footage, lease expiration and the primary use of each of our principal properties:

 




























































Location

  Estimated
Square
Footage
  Lease
Expiration Date
  

Primary Use

Los Gatos, California

  165,000  March 2013  

Corporate office, general and administrative, marketing and technology and development

Sunnyvale, California

  115,000  April 2009  

Receiving and storage center, processing and shipping center for the San Francisco Bay Area

Columbus, Ohio

  90,000  July 2016  

Receiving and storage center, processing and shipping center for the Columbus Area

Hillsboro, Oregon

  49,000  April 2011  

Customer service center

Beverly Hills, California

  20,000  August 2010  

Content acquisition, general and administrative

We operate a nationwide network of distribution centers that serve major metropolitan areas
throughout the United States. These fulfillment centers are under lease agreements that expire at various dates through July 2016. We also operate a data center in a leased third-party facility in Santa Clara, California.

STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%">In the second quarter of 2009, our central receiving and storage center will be moved from its current location in Sunnyvale, California to Columbus,
Ohio. We believe our properties are suitable and adequate for our present needs, and we periodically evaluate whether additional facilities are necessary.

 


20







Table of Contents






Item 3.Legal Proceedings

Information with respect to this
item may be found in Note 5 of the Notes to the Consolidated Financial Statements in Item 8, which information is incorporated herein by reference.

 





Item 4.Submission of Matters to a Vote of Securities Holders

SIZE="2">None.

 


21







Table of Contents


Our stock price is volatile.

FACE="Times New Roman" SIZE="2">The price at which our common stock has traded since our May 2002 initial public offering has fluctuated significantly. The price may continue to be volatile due to a number of factors including the following, some of
which are beyond our control:

 







  

variations in our operating results;

 







  

variations between our actual operating results and the expectations of securities analysts, investors and the financial community;

STYLE="font-size:6px;margin-top:0px;margin-bottom:0px"> 







  

announcements of developments affecting our business, systems or expansion plans by us or others;

STYLE="font-size:6px;margin-top:0px;margin-bottom:0px"> 







  

competition, including the introduction of new competitors, their pricing strategies and services;

STYLE="font-size:6px;margin-top:0px;margin-bottom:0px"> 







  

market volatility in general;

 







  

the level of demand for our stock, including the amount of short interest in our stock; and

STYLE="font-size:6px;margin-top:0px;margin-bottom:0px"> 







  

the operating results of our competitors.

SIZE="2">As a result of these and other factors, investors in our common stock may not be able to resell their shares at or above their original purchase price.

 



19







Table of Contents


Following certain periods of volatility in the market price of our securities, we became the subject of
securities litigation. We may experience more such litigation following future periods of volatility. This type of litigation may result in substantial costs and a diversion of management’s attention and resources.

STYLE="margin-top:18px;margin-bottom:0px">We record substantial expenses related to our issuance of stock options that may have a material negative impact on our operating results for the foreseeable future.

Our stock-based compensation expenses totaled $12.3 million, $12.0 million and $12.7 million during 2008, 2007 and 2006, respectively.
We expect our stock-based compensation expenses will continue to be significant in future periods, which will have an adverse impact on our operating results. The lattice-binomial model used by us requires the input of highly subjective assumptions,
including the option’s price volatility of the underlying stock. If facts and circumstances change and we employ different assumptions for estimating stock-based compensation expense in future periods, or if we decide to use a different
valuation model, the future period expenses may differ significantly from what we have recorded in the current period and could materially affect the fair value estimate of stock-based payments, our operating income, net income and net income per
share.

Financial forecasting by us and financial analysts who may publish estimates of our performance may differ materially from actual results.

Given the dynamic nature of our business, the current uncertain economic climate and the inherent limitations in predicting the future,
forecasts of our revenues, gross margin, operating expenses, number of paying subscribers, number of DVDs shipped per day and other financial and operating data may differ materially from actual results. Such discrepancies could cause a decline in
the trading price of our common stock.

 





Item 1B.Unresolved Staff Comments

None.

STYLE="font-size:18px;margin-top:0px;margin-bottom:0px"> 





Item 2.Properties

We do not own any real estate. The
following table sets forth the location, approximate square footage, lease expiration and the primary use of each of our principal properties:

 




























































Location

  Estimated
Square
Footage
  Lease
Expiration Date
  

Primary Use

Los Gatos, California

  165,000  March 2013  

Corporate office, general and administrative, marketing and technology and development

Sunnyvale, California

  115,000  April 2009  

Receiving and storage center, processing and shipping center for the San Francisco Bay Area

Columbus, Ohio

  90,000  July 2016  

Receiving and storage center, processing and shipping center for the Columbus Area

Hillsboro, Oregon

  49,000  April 2011  

Customer service center

Beverly Hills, California

  20,000  August 2010  

Content acquisition, general and administrative

We operate a nationwide network of distribution centers that serve major metropolitan areas
throughout the United States. These fulfillment centers are under lease agreements that expire at various dates through July 2016. We also operate a data center in a leased third-party facility in Santa Clara, California.

STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%">In the second quarter of 2009, our central receiving and storage center will be moved from its current location in Sunnyvale, California to Columbus,
Ohio. We believe our properties are suitable and adequate for our present needs, and we periodically evaluate whether additional facilities are necessary.

 


20







Table of Contents






Item 3.Legal Proceedings

Information with respect to this
item may be found in Note 5 of the Notes to the Consolidated Financial Statements in Item 8, which information is incorporated herein by reference.

 





Item 4.Submission of Matters to a Vote of Securities Holders

SIZE="2">None.

 


21







Table of Contents


These excerpts taken from the NFLX 10-K filed Feb 28, 2008.

Our stock price is volatile.

The price at which our common stock has traded since our May 2002 initial public offering has fluctuated significantly. The price may continue to be volatile due to a number of factors including the following, some of which are beyond our control:

 

   

variations in our operating results;

 

   

variations between our actual operating results and the expectations of securities analysts, investors and the financial community;

 

   

announcements of developments affecting our business, systems or expansion plans by us or others;

 

21


Table of Contents
   

competition, including the introduction of new competitors, their pricing strategies and services;

 

   

market volatility in general;

 

   

the level of demand for our stock, including the amount of short interest in our stock; and

 

   

the operating results of our competitors.

As a result of these and other factors, investors in our common stock may not be able to resell their shares at or above their original purchase price.

Following certain periods of volatility in the market price of our securities, we became the subject of securities litigation. We may experience more such litigation following future periods of volatility. This type of litigation may result in substantial costs and a diversion of management’s attention and resources.

Our stock price is volatile.

FACE="Times New Roman" SIZE="2">The price at which our common stock has traded since our May 2002 initial public offering has fluctuated significantly. The price may continue to be volatile due to a number of factors including the following, some of
which are beyond our control:

 







  

variations in our operating results;

 







  

variations between our actual operating results and the expectations of securities analysts, investors and the financial community;

STYLE="font-size:6px;margin-top:0px;margin-bottom:0px"> 







  

announcements of developments affecting our business, systems or expansion plans by us or others;

STYLE="margin-top:0px;margin-bottom:0px"> 


21







Table of Contents








  

competition, including the introduction of new competitors, their pricing strategies and services;

STYLE="font-size:6px;margin-top:0px;margin-bottom:0px"> 







  

market volatility in general;

 







  

the level of demand for our stock, including the amount of short interest in our stock; and

STYLE="font-size:6px;margin-top:0px;margin-bottom:0px"> 







  

the operating results of our competitors.

SIZE="2">As a result of these and other factors, investors in our common stock may not be able to resell their shares at or above their original purchase price.

FACE="Times New Roman" SIZE="2">Following certain periods of volatility in the market price of our securities, we became the subject of securities litigation. We may experience more such litigation following future periods of volatility. This type
of litigation may result in substantial costs and a diversion of management’s attention and resources.

This excerpt taken from the NFLX 10-K filed Feb 28, 2007.

Our stock price is volatile.

The price at which our common stock has traded since our May 2002 initial public offering has fluctuated significantly. The price may continue to be volatile due to a number of factors including the following, some of which are beyond our control:

 

   

variations in our operating results;

 

   

variations between our actual operating results and the expectations of securities analysts, investors and the financial community;

 

   

announcements of developments affecting our business, systems or expansion plans by us or others;

 

   

competition, including the introduction of new competitors, their pricing strategies and services;

 

   

market volatility in general;

 

   

the level of short interest in our stock; and

 

   

the operating results of our competitors.

As a result of these and other factors, investors in our common stock may not be able to resell their shares at or above their original purchase price.

Following certain periods of volatility in the market price of our securities, we became the subject of securities litigation. We may experience more such litigation following future periods of volatility. This type of litigation may result in substantial costs and a diversion of management’s attention and resources.

This excerpt taken from the NFLX 10-K filed Mar 16, 2006.

Our stock price is volatile.

 

The price at which our common stock has traded since our May 2002 initial public offering has fluctuated significantly. The price may continue to be volatile due to a number of factors including the following, some of which are beyond our control:

 

    variations in our operating results;

 

    variations between our actual operating results and the expectations of securities analysts, investors and the financial community;

 

    announcements of developments affecting our business, systems or expansion plans by us or others;

 

    competition, including the introduction of new competitors, their pricing strategies and services;

 

    market volatility in general;

 

    the level of short interest in our stock; and

 

    the operating results of our competitors.

 

As a result of these and other factors, investors in our common stock may not be able to resell their shares at or above their original purchase price.

 

Following certain periods of volatility in the market price of our securities, we became the subject of securities litigation. We may experience more such litigation following future periods of volatility. This type of litigation may result in substantial costs and a diversion of management’s attention and resources.

 

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