Netflix profit up but growth targets lag

By Sue Zeidler

LOS ANGELES (Reuters) - Netflix (NFLX.O), the top U.S. online DVD rental company, posted a higher profit and raised its subscriber growth and earnings targets on Thursday, but the stock fell as the outlook fell short of expectations.

Netflix, which has grown at a torrid pace over the past two years to crowd out movie rental chains such as Blockbuster, now expects to end 2009 with 11.2 million to 11.8 million subscribers, up from a previous target of 10.6 million to 11.3 million.

"They're doing everything right, but the stock was priced for perfection and guidance wasn't raised by as much as the whisperers were hoping for," said Michael Pachter, an analyst at Wedbush Morgan Securities.

Netflix raised its earnings per share forecast for the year to a range of $1.56 to $1.72 per diluted share, from $1.43 to $1.59, but the stock fell 6 percent to $42.50 after-hours.

"Expectations have gotten so ramped up for Netflix that it's hard to satisfy people," said Barton Crockett, an analyst at Lazard Capital Markets.

"If there's anything you can poke holes at it's that they came in only at the higher end of guidance for subscribers."

Crockett said it appeared Netflix was finding it increasingly difficult to please investors despite its aggressive move into the emerging business of Internet delivery of movies to TVs and other devices.

Net profit for the first quarter of 2009 rose to $22.4 million, or 37 cents per diluted share, from $13.3 million, or 21 cents per diluted share a year earlier.