Netflix Subscribers Edged Back Up in Q4 — Has It Turned the Corner?

Embattled subscriber giant says it added 600,000 U.S. subscribers

Netflix shares soared Wednesday after the embattled home entertainment company said it had landed more than 600,000 new subscribers during a stronger than expected fourth quarter.

That's just the tonic for a company that saw its share price plunge in the wake of customer defections and outrage.

Netflix reported earnings of $41 million or 73 cents per share, as its revenue rose 43 percent to  $876 million.

Also read: Netflix Shakeup: Chief Marketing Officer Steps Down

That left Wall Street whistling, with shares of the company jumping more than 10 percent to $105.03 in after-hours trading.

Profits were down 13 percent, but the financial picture for the red envelope company beat analysts' expectations of  54 cents a share and $857 million in revenue.

The company has been plagued by subscriber losses in the wake of a price increase to its most popular subscription plan and a controversial plan to spin-off its DVD by mail business called Qwikster. However, Netflix has apologized profusely to its membership and has shelved its ambitions to create a stand-alone DVD business. 

Some of these mea culpas may have done the trick. Netflix grew its subscriber rolls slightly over the earnings period. Though the number of Netflix subscribers dipped below 24 million in the previous period, Netflix reported that its U.S. subscriber base had added some 610,000 people to its rolls and now numbers 24.4 million. 

The improved earnings come as Netflix is betting heavily on original content. The company is poised to launch the Steve Van Zandt mystery series "Lilyhammer" next month via its streaming service and has Kevin Spacey's political series "House of Games" waiting in the wings. 

Looking ahead, Netflix CEO Reed Hastings said he continues to see paid television networks like HBO and Showtime as the company's true rivals, not Hulu and Amazon, which have also bet heavily on video streaming. 

"As we’ve often said, we see the biggest long term threat as TV Everywhere, and in particular, HBO GO, the leading implementation of TV Everywhere to date," Hastings and Netflix CFO David Wells wrote in a letter of shareholders. "HBO has some great content, particularly their original series, but today for most people it is locked behind a linear interface, or at best, behind a DVR interface and in all cases tethered to a linear subscription plan. As HBO GO grows and becomes the primary way that consumers experience HBO, it will become a much more effective competitor for viewing time."