Today: Netflix's profits and revenues more than double from last year as the company tops 50 million subscriptions. Also: Yahoo acquires S.F.-based Flurry as Hillary Clinton visits social-media companies.
The Lead: Netflix keeps growing subscriptions, profits, revenues
Netflix subscriptions topped 50 million for the first time at the end of the second quarter and the company continued to grow profits and revenues as its growing stable of original programming helped overcome an increase to its subscription price and competition for viewers from the World Cup.
The Los Gatos-based video-on-demand company reported second-quarter earnings of $71 million, or $1.15 per share, on sales of $1.34 billion, with both profits and revenues more than doubling from the same quarter a year ago. Netflix beat its own projections for subscriber growth in its streaming service, surviving a price hike for new members and the international soccer competition in Brazil that dominated attention worldwide for much of the quarter to add 1.7 million new members for a total of 50.1 million customers.
"During the World Cup, we were concerned that we would see a drop-off around the world -- particularly in Brazil -- and that we didn't want to over-read it if we saw a drop-off in net adds and growth. What was incredible is just how straight our line of net additions was, in Brazil, during the World Cup," CEO Reed Hastings said in a conference call Monday.
The quarter included the debut of the second season of "Orange is the New Black," a Netflix original series that garnered 12 Emmy nominations for its first season, part of a huge haul of 31 nominations for Netflix. While the company does not provide information on viewership for its shows, Netflix said that the show was "the most-watched series in every Netflix territory" in the new season's first month of release.
"The release of 'Orange is the New Black' Season 2 has been every bit the global media event we had hoped for; critically acclaimed and embraced by a fervent and growing fan base," Hastings and Chief Financial Officer David Wells wrote in a letter to shareholders.
Netflix focused on growing territory and a developing stable of original content in its report. The company revealed that it will launch streaming service in Germany, France, Austria, Switzerland, Belgium and Luxembourg in September, which have more than 60 million households with broadband Internet service. It also reported that production has begun on original series such as the historical saga "Marco Polo," superhero offering "Daredevil" and the third season of "House of Cards."
Netflix stock gained 1.8 percent to $451.95 in the regular session, and gained slightly in late trading, topping $456.
In other second-quarter earnings reports from Silicon Valley's largest tech companies Monday, San Jose's Sanmina reported net income of $20.7 million, or 24 cents a share, on sales of $1.6 billion, and shares jumped more than 13 percent in after-hours trading; Cadence Design Systems, also based in San Jose, reported profits of $23.3 million, or 8 cents a share, on sales of $379 million, and its stock stayed steady; Hayward's Ultra Clean revealed net income $6 million, or 20 cents a share, on sales of $132.7 million, and shares fell more than 8 percent; and Sunnyvale-based Rambus earned $5 million, or 4 cents a share, on sales of $76.5 million and declined in late trading.
SV150 market report: Stocks decline ahead of Yahoo acquisition
Stock indexes dipped slightly Monday, with Silicon Valley technology stocks performing slightly better than the broad-based national indexes ahead of the announcement of a large mobile acquisition for Yahoo after the market closed.
Yahoo CEO Marissa Mayer made one of her biggest commitments yet in a wave of mobile acquisitions, picking up San Francisco mobile-app analytics company Flurry. The Sunnyvale company did not announce a price in its confirmation of the deal, which was reported earlier in the day by Recode, but the Wall Street Journal reported that Yahoo paid more than $200 million and TechCrunch contended that the price topped $300 million. While likely not familiar to consumers, Flurry offers technology used by marketers and app makers to determine popularity of mobile software, as well as to target ads and quantify advertising campaigns; with Yahoo, it could be used to boost the monetization of the company's stable of mobile apps while bringing in revenue from selling the service to outside entities. Yahoo stock dropped 0.2 percent $33.28 Monday.
Social media rivals Facebook and Twitter both gained as former Secretary of State Hillary Clinton visited their Silicon Valley headquarters: Facebook increased 1.4 percent to $69.40 while launching a new service that saves links and other content for users to access later, and Twitter jumped 2.7 percent to $38.05 as the San Francisco company works on improving its direct-messaging feature. Tesla Motors added 0.2 percent to $220.54 while revealing that its Fremont production line will shut down for two weeks for an upgrade aimed at faster production of its Model S sedan as well as manufacturing of its Model X SUV-style car, which it plans to begin selling in early 2015. Hewlett-Packard revealed that its settlement of a shareholder lawsuit stemming from the Autonomy acquisition could be held up by a challenge from Autonomy's former chief financial officer, and shares dropped 0.8 percent to $34.52. Gilead Sciences, which is fighting patent battles to preserve the profits from its blockbuster hepatitis C drug Sovaldi, declined 0.4 percent to $88.86 after a CVS executive contended that the price of the drug could drive up annual insurance premiums for every American by $200 to $300. GoPro gained 0.4 percent to $41.58 as its underwriting banks released initial reports on its stock, and VMWare fell 2.5 percent to $92.95 after activist investor Elliott Management -- already embroiled in fights with Riverbed Technology and Juniper Networks -- pressured EMC to divest its shares of the Palo Alto company.
Up: SolarCity, Twitter, Pandora, Juniper, Netflix, Zynga, Facebook, LinkedIn, Intel
Down: VMware, AMD, Google, SanDisk, HP, Adobe, Splunk
The SV150 index of Silicon Valley's largest tech companies: Down 0.49, or 0.03 percent, to 1,531.59
The tech-heavy Nasdaq composite index: Down 7.44, or 0.17 percent, to 4,424.7
The blue chip Dow Jones industrial average: Down 48.45, or 0.28 percent, to 17,051.73
And the widely watched Standard & Poor's 500 index: Down 4.59, or 0.23 percent, to 1,973.63