Down Economy Boosting Netflix: Guidance Adjusted

Wednesday at Jeffries annual Internet Conference, Netflix CFO Barry McCarthy delivered the most unusual of things for this earnings season: a positive announcement.  On the back of a $100m stock buyout program, and decreasing competition from Blockbuster, Netflix raised their prior earnings guidance.

In his report, McCarthy said the company is now expecting first quarter earnings of 15 to 22 cents a share, up from prior forecasts that fell in the 13 to 21 cent range. Click to Read More

Disney Online: Reorg Increases Focus

disney staffWith the gaming industry setting records at retail, content creators are increasingly looking to bring development activity in house instead of having to share the revenue pie with  third party developers.  To that end, it’s been previously reported that video game tie-ins for the next installment of Disney/Pixar’s Toy Story franchise will be developed inside Disney instead of with previous partner THQ.  Now, to keep on top of similar online and casual gaming initiatives, and streamline internal management, Disney has announced they will create a new division within the Disney Online Internet Group. 

The new organization will be called Disney Online Studios.   While not exciting news to those uninvolved, the reorganization hints at Disney’s recognition of the increasing value of their online entertainment offerings and shows a concerted plan to accelerate development of new offerings.(Disney made related moves to strengthen its M&A focus in late November. )

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WalMart drops HD DVD

dvd warsLike a ball rolling down hill, HD DVD’s demise appears to be picking up speed and momentum.  Following on the heels of Netflix announcement, and similar news from Best Buy, now Wal-Mart too is dropping the format in favor of rival Blu Ray too.

Both on their blog and in a statement, Wal-Mart has acknowledged HD DVD will be phased out of their stores within a few months.

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Netflix Backs BluRay, Drops HD DVD

dvd warsThe HD DVD next generation DVD format went on life support went Warner Brothers pledged their loyalty to rival Blu Ray just before the start of January’s Consumer Electronics Show.  A dramatic price cut in January 14th has done little in the way of resuscitation.   Now, in a signal the format’s days are growing especially short, DVD rental service Netflix is dropping HD DVD too.

While Netflix doesn’t rent a tremendous volume of high definition discs, they’ve stocked both Blu Ray and HD DVD since 2006.  Per their new decision, which was announced today, they will phase out all HD DVD discs from their inventory by the end of the year.  They will also cease adding new HD DVD titles effective immediately.

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Amazon Sells European DVD service to LoveFilms

lovefilm amazonAs sure handed as Amazon’s digital strategy seems to be, adjustments in forward planning are always necessary.  On Monday, Amazon made such an adjustment with the rare move to exit a market they were already targeting.

According to the announcement, Amazon Europe will sell their online video rental service in the UK and Germany to LoveFilm International Ltd in exchange for an equity stake.  Amazon will also invest cash.  The move will allow Amazon to focus on its core retail business and digital strategies but still allow them to retain a beneficial interest in their prior DVD rental investment.

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Murdoch Speaks: The State of News Corp

news corp q2After the close of markets Monday, News Corp released their second quarter earnings.  The numbers, which are reported below, were very good on an operating level despite slightly missing profit expectations. Also, in a true rarity for this earnings season, the company raised its guidance for fiscal 2008 operating income. 

More insightful than the numbers was the analysts call and Q&A. Rupert Murdoch’s participation is a little like a light version of Warren Buffet’s famous annual meeting speeches.  Mr. Murdoch is at times frank, occasionally reserved but always on point and extremely well informed.  At one point, he even corrected one of his colleagues on the numbers. What follows are some of Murdoch’s comments on the News Corp empire, broken out by theme:

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Sony Gaming Back in Black, Future Earnings Hazy

sony earnsThanks to time zone differences, Sony was one of the first companies to report earnings on what is an extremely busy earnings calendar (Electronic Arts, New York Times Co.  Google, and Getty Images all report today as well).   As has been the case with many technology and consumer facing companies already to report, their results for the past quarter were moderate to positive but the gray cloud of overall economic conditions led to a cautious and hazy future forecast for the coming months (and year).

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