In late 2010, Tilson pointed out that Netflix‘s “acquisition of streaming content” on the cash flow statement wasn’t immediately being recognized under “acquisition of streaming content library” as an expense in the income statement.
For the third quarter of that year, Tilson noted that even though streaming-content costs were $115 million (up 74%), the associated amortization expenses increased only 17%. He noted in his presentation that from the first quarter of 2007 through the third quarter of 2009, acquisition costs were roughly equal to the amortization expense. Yet, starting in the fourth quarter of 2009 (when streaming-content costs started to accelerate), the two diverged.
- Netflix’s big collapse: Do you believe in streaming, international expansion? (zdnet.com)
- Shares plummeting, Netflix a worthy acquisition, analyst says (news.cnet.com)
- The Real Reason Netflix Stock Tanked (blogs.hbr.org)
- Netflix Fails To Meet Lowered Expectations On Subscriber Losses (paidcontent.org)
- Netflix Nightmare: 800,000 Customers Flee in Third Quarter (blippitt.com)
- How Low Can Netflix Go? (online.wsj.com)
- Netflix’s ‘Nuclear Winter’: Analysts React (blogs.wsj.com)
- Netflix Loses 800,000 Customers in Quarter (mashable.com)
- Netflix stock suffers; “Yet to decide” on game rentals (slashgear.com)