Netflix Must Ponder Its Endgame Strategy

Was it really only 15 months ago when everyone loved Netflix? The stock had risen nearly eightfold during a two-year rally, CEO Reed Hastings was hailed as a game changer and was asked for the secrets of his success, and Netflix was on track to kill off cable and rule the new world of online video.

Today, the cable industry continues to thrive and Netflix is the one on the ropes. The company’s stock dropped 12 per cent Wednesday, marking a 80-per cent decline from its record high of $304 a share back in July 2011. Netflix had a decent enough quarter, with revenue in line with analyst expectations and net profit nine cents a share higher. But the company warned that revenue in the current quarter will be weak in North America at a time when Netflix is spending heavily to expand into overseas markets.

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