Why Netflix Crashed: Opinion
NEW YORK (TheStreet) -- To be clear, the headline does not contain a direct quote from Netflix(NFLX) CEO Reed Hastings. When asked on his company's Monday afternoon conference call if he had plans to spin off the DVD division, Hastings did not give his usual long, thorough, articulate and well-thought out answer.
"No, we're not thinking of that." That was Hastings' exact response. It sounded as if it came mid-swallow or during a yawn. And it was typical Reed Hastings: Discount the idea as complete and total lunacy by feigning indifference and apathy with the standard touch of arrogance. It's almost as if the question is so stupid, I have to reduce myself to serf or peasant status to muster a response.
Let's go back to July of 2011. Here's what Hastings had to say about his company's DVD division:
Because we believe we can best generate profits and satisfaction by keeping DVD by mail as a division, we have no intention of selling it. In Q4, we'll also return to marketing our DVD by mail service, something we haven't done for many quarters. Our goal is to keep DVD as healthy as possible for as many years as possible.
Finally, at least a hint of consistency. We will not sell DVD. At least in the first sentence, but not so much in the second and third. Here's what Hastings said about DVD just six months later:
DVD will do whatever it's going to do. We're not -- we're going to try to not hurt it, but we're not putting a lot of time and energy into doing anything particular around it . . . .
I fully realize we've been over this before, but it bears repeating because things have a way of changing on a dime at Netflix.
Lots of folks are wondering this morning why Netflix crashed on what was not a horrific earnings report.
In this article, I explain why Netflix crashed (and will continue to crash). I also discuss why, before long, Hastings might just change his mind on DVDs yet again.
Reason for the Latest Implosion