Netflix Sees Earnings Drop

LOS GATOS: Despite adding 1.16 million streaming subscribers in the third quarter and increasing streaming revenue by $36 million, Netflix reported overall earnings that were down 88 percent from the prior year.

The company earned $8 million for Q3, compared to a profit of $62 million in same period a year ago. This is due in large part because the costs of content spiked from $3.5 billion to $5 billion during that time span. Revenue increased from $822 million to $905 million.

Netflix ended the quarter with 25.1 million U.S. streaming customers, and says it now expects to end 2012 with 26.4 million to 27.1 million streaming subs. This is a gain of somewhere between 4.7 million and 5.4 million, though it previously estimated that it would gain 7 million for the full year.

The company is also anticipating anywhere from a loss of $13 million to a profit of $2 million for Q4. This is due to its expansion into Finland, Denmark and Sweden.