Wall Street Transcript Interview with David W. Miller, Managing Director at Caris & Company: Opportunities and Risks at Netflix (NFLX) and TiVo (TIVO)
67 WALL STREET, New York - November 14, 2012 - The Wall Street Transcript has just published its Entertainment, Toys and Games Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
Topics covered: Cable Subscription Rates - International Paid Television Growth - Digital Advertisement Trends - Mobile Device Gaming Prospects - Content Quality
Companies include: Lions Gate Entertainment Corp. (LGF), DreamWorks Animation SKG Inc. (DWA), Walt Disney Co. (DIS), Netflix, Inc. (NFLX), TiVo Inc. (TIVO), EchoStar Corp. (SATS), AT&T, Inc. (T), Verizon Communications Inc. (VZ), Time Warner Cable Inc. (TWC), Regal Entertainment Group (RGC), CBS Corporation (CBS), Time Warner Inc. (TWX), Discovery Communications, Inc. (DISCA)
In the following excerpt from the Entertainment, Toys and Games Report, an experienced media analyst discusses the outlook for the sector for investors:
TWST: There are several potential risks for Netflix. Which of those potential risks are you most concerned about, and which ones do you believe that Netflix is well prepared to deal with?
Mr. Miller: Well, I would say that the greatest risk, right now, is additional downside of the numbers for next year, because right now what the equity markets are doing is evaluating the stocks for next year's earnings profile. This year is essentially over as it applies to the equity markets, because the equity markets usually think six, seven, eight months ahead of time. So the big mystery surrounding Netflix (NFLX) is: What is Netflix's earnings profile and free cash flow profile going to look like next year? And the concern is that, with yet more international launches to take place, any hint of free cash flow is going to be eaten up by startup expenses required to exist in a new market.
So for example, look at the current fourth quarter, anyone who had this company generating cash in the fourth quarter, now has to rethink their model, because of startup expenses in Scandinavia. Now, I would predict that the folks in Sweden, Finland and Norway and those areas will embrace Netflix just like the folks in Canada have done, just like the folks in the U.K. and Ireland have done. But it's going to cost them money in terms of the marketing, technology and development, and overall startup costs in the region.