Netflix Slashes Prices, Posts Jump in Profit

Online DVD rental company Netflix Inc. on Thursday cut its subscription price 18% in the face of rising competition and reported that its third-quarter earnings had more than quintupled.

Shares of the company, based in Los Gatos, Calif., lost more than a third of their value in after-hours trading.

Netflix cut its fee for unlimited monthly DVD rentals to $17.99 from $21.99, beginning in November. The company rents DVDs to online customers, delivering the disks by mail and charging no late fees. It has recently started to face competition from giants Blockbuster Inc. and Wal-Mart Stores Inc.

Netflix’s stock has tumbled by more than half since January, when it topped $39, as short sellers have bet against the stock.

The company said third-quarter earnings rose sharply on rapid subscriber growth and lower costs, but said that it expected increasing competition in the coming year.

The third-quarter net income of $18.9 million, or 29 cents a share, was up from $3.3 million, or 5 cents, in the year-earlier period. Revenue soared 96% to $141.6 million from $72.2 million.

Netflix shares fell as much as $6.88 to $10.55 in extended trading after rising 8 cents to $17.43 in regular Nasdaq trading. The stock has fallen 36% this year.