NEW YORK — Netflix shares plunged in after-hours trading Monday after the US video service said it lost more US subscribers in the third quarter.
Netflix, which has seen a spate of management bungles in recent months, said it had 23.8 million subscribers in the United States at the end of the quarter, a loss of 810,000 from the previous quarter.
Netflix said net profit rose 65 percent to $62 million in the third quarter compared to the same quarter a year ago while revenue was up 49 percent to $822 million.
While revenue and earnings per share came in better than expected by Wall Street analysts it was the loss of US subscribers that sent Netflix shares down a whopping 26.91 percent in after-hours trading to $86.85.
Netflix shares were trading as high as $304.79 on July 13.
Netflix chief executive Reed Hastings referred to the recent problems at the Los Gatos, California-based company in a letter to shareholders accompanying the earnings report.
Netflix suffered a backlash from members earlier this year when it announced a price hike for customers who receive both its online video streaming service and its DVD-by-mail service.
In addition to raising prices, Netflix also announced and then quickly backpedaled on a plan to separate its DVD rental service from the online streaming unit, which was to be rechristened "Qwikster."
"In hindsight, Qwikster is hard to justify," Hastings said in an earnings conference call.
"Qwikster became the symbol of Netflix not listening," he continued, noting the company still saw streaming video as the future. "Going forward, we are going to be pushing and promoting streaming."
Netflix appeared to be at the end of a second wave of cancelations by subscribers irked by a price hike, according to executives.
"We greatly upset many domestic Netflix members with our significant DVD-related pricing changes, and to a lesser degree, with the proposed-and-now-canceled rebranding of our DVD service," Hastings said.
"In doing so, we've hurt our hard-earned reputation and stalled our domestic growth," he said.
"Our primary issue is many of our long-term members felt shocked by the pricing changes, and more of them have expressed that by cancelling Netflix than we expected," he said.
Netflix on Monday announced plans to expand its online streaming service to Britain and Ireland in early 2012 but said it could lead to a net loss in the first quarter of next year because of costs associated with the move.
"We are eager to get back to our international expansion but we need to take a few quarters to get our subscriber base back," Hastings said.
"We are extremely focused on growing our streaming business on a global basis," he continued.
Netflix launched in the United States in 2007, expanded to Canada last year and to 43 countries in Latin America and the Caribbean last month.
Netflix expected to spend more money on movies and television shows for its streaming service in the year ahead but that the cost would be more than offset by increased ranks of subscribers.
The company did will not invest further in facilities for is DVD-by-mail service.
"We think the future is brightest by focusing on streaming," Hastings said.
"I think everybody sees that Internet video is going to be an enormous market in the coming years," he added.