Bloomberg News

Netflix Falls as Comcast Boosts Competition: Los Angeles Mover

February 22, 2012

Feb. 22 (Bloomberg) -- Netflix Inc., the Internet and mail- order video-rental service, fell the most in more than two months after cable company Comcast Corp. said it would expand offerings to customers interested in streaming movies online.

Netflix fell 5 percent to $111.58 at 2:09 p.m. in New York trading and dropped as low as $108.54 for its biggest intraday percentage decline since Nov. 30. The shares had risen 69 percent this year through yesterday.

Comcast, the largest U.S. cable-television company, said yesterday it would begin offering customers the added ability to stream movies and TV shows to devices outside the home. The Philadelphia-based company’s Xfinity Streampix service joins Dish Network Corp.’s Blockbuster@Home in offering so-called TV everywhere services. Reed Hastings, chief executive officer of Los Gatos, California-based Netflix, also lists among his rivals Time Warner Inc.’s HBO Go service, Amazon.com Inc. and Hulu LLC.

John Blackledge, an analyst with Credit Suisse Securities in New York, and Michael Olson, an analyst at Piper Jaffray Cos. in Minneapolis, said investors shouldn’t worry.

Comcast Xfinity Streampix will offer older TV shows and films to existing customers and isn’t competing with Netflix in all U.S. markets, Blackledge wrote in a note to clients today. He has an “outperform” rating on Netflix shares.

Netflix “remains differentiated” and is benefiting from a shift to carry more TV content, Olson said in a note of his analysis of the company’s online catalog compared to Hulu and Amazon. Olson reiterated his “overweight” rating on the stock.

“Netflix has more of the top 50 TV shows from the last two years, and fewer top 50 movies from the last two years,” Olson said. “Hulu Plus has a comparable library of popular TV, but no popular movies, and Amazon has very little top-tier content.”

Hastings efforts to get more exclusive content for Netflix’s streaming site also will help the company differentiate, said Youssef Squali, a Jefferies & Co. analyst in New York, who reiterated his “hold” rating on the shares.

--Editors: Romaine Bostick, Cecile Daurat

To contact the reporter on this story: Cliff Edwards in San Francisco at cedwards28@bloomberg.net

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net


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