Market Overview

Is Netflix About to Cut Jobs?

In perhaps the least surprising piece of news this week, Bloomberg Businessweek is reporting that Netflix (NASDAQ: NFLX) is preparing to cut jobs.

The report has yet to be confirmed, but in the wake of a disastrous month for NFLX, surely it is only a matter of time before some heads will unfortunately roll. Those losses have to be recouped from somewhere.

They seem to be starting slowly, with Bloomberg stating that 15 jobs have been eliminated after losing 800,000 subscribers in the third quarter. With Netflix monthly subscription fees amounting to a minimum of $10 per month, this means that the company lost in excess of $8 million in Q3.

Unless those employees who have lost their jobs were earning $534,000 per year each, then this is inevitably only the beginning.

According to Bloomberg, Netflix spokesman Steve Swasey declined to comment. “He said last week the company had eliminated the position of chief marketing officer for the planned DVD service. Netflix finished 2010 with 2,180 employees, according to data compiled by Bloomberg.”

The coming weeks will inevitably be fascinating.

ACTION ITEMS:

Bullish:
Traders who believe that Netflix will recover might want to consider the following trades:

  • Reed Hastings does not mind taking risks and suffering some short-term pain for the long-term good. Do not count him out.

Bearish:
Traders who believe that Netflix is all but finished may consider alternate positions:

  • Customers have lost faith in the company and management seems to be utterly confused about how to move forward.

Neither Benzinga nor its staff recommend that you buy, sell, or hold any security. We do not offer investment advice, personalized or otherwise. Benzinga recommends that you conduct your own due diligence and consult a certified financial professional for personalized advice about your financial situation.

Posted-In: News Rumors General Best of Benzinga

 

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