Netflix Posts 2Q Profit as Revenue, Customer Base Grow

But Netflix shares tumble 14% after it warns it may not reach its year-end target for new subscribers and will record a loss in last three months of the year

Netflix warned on Tuesday it may have trouble reaching its year-end target for new subscribers and will record a loss in the last three months of the year, sending the shares of the video rental company down 14 percent.

For the second-quarter, Netflix reported earnings of 11 cents a share, beating analysts expectations of 5 cents, and said it added 530,0000 new customers to its video streaming service in the U.S. market.

But in a quarterly letter to shareholders, the company said the Olympicsg will likely hurt its ability to sign-up new customers in the current quarter, when it expects to add 1 million to 1.8 million subscribers.

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Netflix said it would stay on track to reach 7 million net additions for all of 2012 if the company hits the high end of third-quarter estimate.

"Otherwise, it would be challenging to achieve that goal by year end," said the letter from CEO Reed Hastings and CFO David Wells.

The company also said it would be in the red in the fourth quarter when it launches its streaming service in another international market. Netflix had a loss in the first three months of the year as it expanded into Britain, but returned to a profit in the second quarter.

“Guidance on the (subscribers) was cautious," Morningstar analyst Michael Corty said in explaining the share drop.

Netflix shares were down 14 percent at $69.15 in after-hours trading from their $80.39 close on Nasdaq.

The company said its second-quarter revenue rose to $889 million in the April to June period. Profit was $6 million.