Pomerantz Law Firm Reminds Shareholders of Netflix of Upcoming Deadline -- NFLX
NEW YORK, March 2, 2012 (GLOBE NEWSWIRE) -- Shareholders of Netflix, Inc. ("Netflix" or the "Company")(Nasdaq: NFLX) are reminded of the securities class action lawsuit filed against the Company and certain of its officers. The class action (12-CV-0439), filed in the United States District Court, Northern District of California, is on behalf of a class consisting of all persons or entities who purchased Netflix securities between December 20, 2010 and October 24, 2011, inclusive (the "Class Period"). This class action is brought under Sections 10(b) and 20(a) of the Securities Exchange Act, 15 U.S.C. Sections 78j(b) and 78t(a); and SEC Rule 10b-5 promulgated thereunder by the SEC, 17 C.F.R. § 240.10b-5.
The Complaint alleges that throughout the Class Period, the Company issued materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company's business, operations, and prospects. Specifically, Netflix made false and/or misleading statements and/or failed to disclose that: (1) the Company had short-term contracts with content providers and Netflix was aware that the Company faced a choice to renegotiate the contracts in 2011 at much higher rates or not renew them at all; (2) content providers were already demanding much higher license fees, which would dramatically effect Netflix's business; (3) the Company recognized that its pricing would have to significantly increase to maintain profit margins given the streaming content costs that it would soon incur; and (4) the Company was not on track to achieve the 2011 earnings forecasts.
On September 1, 2011, after the market closed, Starz Entertainment, LLC announced that it had "ended contract renewal negotiations with Netflix." On this news, Netflix's shares declined $20.16 or more than 8%, to close at $213.11 on September 2, 2011.
On September 15, 2011, Netflix issued a press release announcing an update to its third quarter 2011 guidance. Netflix revealed that it had lost a million subscribers upon its price increases becoming effective. On this news, Netflix's shares declined $53.52 per share or more than 25% in two trading sessions, to close at $155.19 per share on September 16, 2011.
On September 18, 2011, Company CEO Reed Hastings announced the separation of its streaming and DVD by mail services whereby the DVD by mail service would be renamed Qwikster and the streaming service would retain the Netflix name. Also, subscribers would be charged separately for the two services. As a result of this news, Netflix's shares dropped $26.69 per share or 17% over three trading sessions, to close at $128.50 per share on September 21, 2011.
On October 24, 2011, Netflix issued its financial results for the third quarter ended September 30, 2011 where it disclosed that it had a net loss of 810,000 U.S. subscribers, translating into a cumulative loss of 5.5 million subscribers. As a result of this news, Netflix's shares declined $41.47 per share or nearly 35%, to close at $77.37 per share on October 25, 2011.
The Pomerantz Firm, with offices in New York, Chicago and Washington, D.C., is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz Firm pioneered the field of securities class actions. Today, more than 70 years later, the Pomerantz Firm continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See www.pomerantzlaw.com.