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"Netflix hit 25 million subscribers and broke records for both its revenues and its earnings in the second quarter, but cut its earnings outlook for the next few months since it expects some fallout from its recent price hike.\nThe company added 1.8 million subscribers in the quarter and posted a net income of $68 million on revenues of $789 million \u2014 both records. But the quarter, which ended June 30 and was unaffected by the price increase, was a transitional one for the company. As the company noted in a letter to shareholders: \"The streaming-only plan continued to gain in popularity, with nearly 75% of our new subscribers signing up for it. As a result, our average subscription price reverted to a slight quarter-over-quarter decline.\" \nThe company also noted that \"With the rapid adoption of streaming, DVD shipments for Netflix have likely peaked.\"\nThose events no doubt led Netflix to provide more incentive for users to take the streaming-only option. Since more customers are streaming rather than getting DVDs through the mail, the company was able to report a domestic operating margin of 16.3%, above the 14% target. However, because it will negotiate with studios for more streaming titles in the second half of the year, it is continuing to project a 14% margin through 2011.\nThough the company defended its price increase \u2014  \"We hate making our subscribers upset with us, but we feel like we provide a fantastic service and we\u2019re working hard to further improve the quality and range of our streaming content in Q4 and beyond\" \u2014 Netflix is planning to lose some subscribers in Q3, which sent its stock skidding 8% in after-hours trading. Netflix expects that effect to be short-lived, though. By Q4, the company plans to return to the growth it had previously enjoyed and possibly have its first billion-dollar quarter.\nIn addition, Netflix is planning to launch its Facebook integration in the coming quarter. However, because of limitations imposed by the Video Privacy Protection Act, that integration won't happen in the U.S. Facebook users in Canada and Latin America will see Facebook integration first.\nBONUS: Chronicling Netflix's Downturn, July to October 2011\n\n\nChronicling Netflix's Collapse\n\n\n\n\n\n\n\n1. Netflix Stock Hits All-Time High\n\n\nJuly 13, 2011\nNetflix stock more than doubled over the previous year, then increased by 15% in May to reach its last all-time high in July of $300.\n\n\n\n\n\n\n\n\n\n\n\n2.. Netflix Price Hike Takes Effect Today\n\n\nSept. 1, 2011\nNetflix cancelled its $9.99 combined streaming and DVD plan and separated the services into two separate $7.99 plans.\nPhoto courtesy of Flickr, matthew393\n\n\n\n\n\n\n\n\n\n\n\n3. Netflix Has Lost Half Its Value in Two Months\n\n\nSept. 19, 2011\nThe stock dropped 50% from its July 13 all-time high.\nNetflix Price Stock Chart by YCharts\n\n\n\n\n\n\n\n\n\n\n\n4. Netflix Apologizes to Customers &amp; Rebrands Its DVD Service\n\n\nSept. 19, 2011\nNetflix CEO Reed Hastings introduced Qwikster, the company that would take over its DVD service.\n\n\n\n\n\n\n\n\n\n\n\n5. Netflix Abandons Qwikster DVD Plan\n\n\nOct. 10, 2011\nRecognizing that Qwikster would end up \"making things more difficult\" for its customers, Reed Hasting announced that Netflix will forego DVD rebranding.\n\n\n\n\n\n\n\n\n\n\n\n6. Netflix Loses 800,000 Customers in Quarter\n\n\nOct. 24, 2011\nBy Monday Oct. 24, over 805,000 Netflix customers had cancelled their subscriptions due to the company price hike.\nImage courtesy of Flickr, Ross Catrow\n\n\n\n\n\n\n\n\n\n\n\n7. Netflix Stock Plummets 27% Following Earnings Report\n\n\nOct. 24, 2011\nDown to $85 share price from $300 this summer, Netflix's stock fell 27% following the announcement that it had lost 800,000 customers.\nNetflix Stock Chart by YCharts\n\n\n\n\n\n\n\n\n\n\n\n8. Netflix Stock Falls 37% as Subscribers Depart\n\n\nOct. 25, 2011\nBy premarket trading Tuesday morning, Netflix stock had fallen another 10% since the evening before.\n\n\n\n\n\n\n\n"^^<http://www.w3.org/2001/XMLSchema#string>
<http://mashable.com/2011/07/25/netflix-fallout-price-hike/>