* Outperforms targets for revenue, subscribers

* Internet video streaming service propels growth

* Full-year forecast about Wall Street average

* Shares climb 8 percent in after-hours trade
(Adds comments from CEO, analysts; updates share price)

By Gina Keating

LOS ANGELES, Jan 26 (Reuters) - Netflix Inc's (NFLX.O: Quote, Profile, Research)
share price jumped about 8 percent on Monday after the top U.S.
online DVD rental company posted unexpectedly rosy quarterly
results propelled by growth in its Internet video streaming
service.

The company also forecast a revenue range for full-year
2009 above the average of Wall Street estimates and said it
sees strong momentum so far this quarter.

"It's very clear that streaming is energizing our growth,"
Netflix Chief Executive Reed Hastings said on a conference call
with analysts.

A record-setting 2 million gross subscriber additions drove
down Netflix's average marketing costs to a near-record low and
surprised executives who in October predicted slower growth.

Netflix executives also said no data, such as increased DVD
usage, showed that the U.S. recession was boosting growth as
"cocooning" consumers turned to home entertainment.

The company had not reckoned with how quickly consumers
would adopt Netflix-enabled electronics, such as Microsoft
Corp's (MSFT.O: Quote, Profile, Research) Xbox 360 game consoles and LG Electronics Inc's
(066570.KS: Quote, Profile, Research) Blu-Ray players, Hastings said.

"We saw a big increase in growth and don't know if it's
because of the recession or because of the streaming," Hastings
told Reuters. "It would be easy to say we are countercyclic but
maybe we would have grown faster if it hadn't been for the
downturn."

Last month, about one-fifth of the company's nearly 10
million subscribers used its "Watch Instantly" service that
lets them stream movies and TV shows to laptops or TVs.

That dynamic has already pushed down DVD use and, if it
continues, could bring down costs and enlarge margins, Chief
Financial Officer Barry McCarthy told analysts.

Netflix saw its margins expand in the quarter to 35.2
percent from 33.8 percent a year ago as average marketing costs
dropped and cancellations held steady.

MIXED FEELINGS

Analysts had mixed feelings about whether the results
reflected a holiday uptick in subscriptions by consumers trying
out new Netflix-enabled devices or showed that the Los Gatos,
California, company was riding a swell of online streaming.

"Netflix is notorious for posting huge quarters followed by
big disappointments, in large part because of sudden changes in
the competitive landscape," Jefferies & Co analyst Youssef
Squali said. "It now looks poised to continue to outperform in
the first half of 2009 but the second half remains unclear."

Wedbush Morgan analyst Michael Pachter said, however, that
the record gross subscriber growth likely had its roots in the
exploding population of Xbox 360 owners.

"There is no reason to believe that won't continue next
quarter and the next and the next," Pachter said.

Netflix would not disclose which devices contributed most
to its growth.

The company also announced share repurchases of up to $175
million for the year.

Net income for the fourth quarter rose nearly 45 percent to
$22.7 million, or 38 cents per share, from $15.7 million, or 23
cents per share, in the year-earlier quarter. On an adjusted
basis, earnings grew to 41 cents per share.

Revenue increased 19 percent to $359.6 million from $302.4
million a year earlier.

The net income, adjusted income and revenue in the quarter
all beat analysts' average forecasts of 34 cents per share, 37
cents per share and $354.2 million, according to Reuters
Estimates.

The results fell within the company's own forecast ranges
for revenue of $351 million to $357 million and net earnings of
30 to 38 cents per share.

Subscriber growth in the fourth quarter of 26 percent
resulted in an ending subscriber base of 9.4 million, exceeding
Netflix's forecast of up to 9.15 million.

FORECASTS

The company expects first-quarter revenue of $387 million
to $393 million and full-year revenue of $1.58 billion to $1.64
billion.

Those ranges are above the averages of analysts' forecasts
both for first-quarter revenue, $373.4 million, and for
full-year revenue, $1.54 billion, according to Reuters
Estimates.

Netflix forecast net earnings of 25 cents to 33 cents per
diluted share in the first quarter and $1.43 to $1.59 per
diluted share for all of 2009.

Wall Street's average forecasts for per-share net earnings
were within both those ranges -- 30 cents for the first quarter
and $1.49 for the year.

Netflix expects to end the first quarter with 10.1 million
to 10.3 million total users, and finish off the full year of
2009 with 10.6 million to 11.3 million total subscribers.

Shares of Netflix jumped about 8 percent to $32.51 after
closing nearly 1 percent lower at $30.15 on Monday on Nasdaq.
(Reporting by Gina Keating; editing by Carol Bishopric, Gary
Hill)