Netflix Delivers 1 Billionth DVD

From Yahoo Finance

SAN FRANCISCO (AP) -- Netflix Inc. delivered its 1 billionth DVD over the weekend, marking another milestone in the Internet rental service's evolution from a peculiar dot-com to a marquee attraction in millions of homes.

It took Netflix nearly 7 1/2 years to mail out 1 billion DVDs -- about seven months less that it took McDonald's Corp. to sell 1 billion hamburgers after opening its first restaurant in April 1955.

To commemorate the occasion, Netflix is awarding a lifetime subscription to the Helotes, Texas, customer who received the 1 billionth DVD shipped from one of the Los Gatos-based company's 42 distribution centers nationwide.

Netflix didn't identify the recipient because of its privacy policies but did reveal the title of the landmark DVD -- "Babel," one of the best picture nominees in Sunday's Academy Awards ceremony.

The Oscars play a big role in shaping the rental requests of Netflix's 6.3 million subscribers.

"Crash," the best picture winner at last year's Academy Awards, ranks as the most frequently requested DVD from Netflix's library of more than 70,000 titles. "Million Dollar Baby," the 2005 best picture winner, is the fifth most requested rental.

But it doesn't necessarily take a prestigious award to become a big hit on Netflix. The service's second-most rented DVD is "Mr. and Mrs. Smith," a less acclaimed flick best known for sparking an off-screen affair between stars Angelina Jolie and Brad Pitt.

Crossing the 1 billion shipment threshold provides further validation for a concept that was once was mocked as just another wacky idea to emerge from the Internet boom of the late 1990s. The achievement also provides another marketing hook for one of the Internet's biggest advertisers.

Instead of fading into dot-com oblivion, Netflix is fast becoming as much of a household fixture as the living room couch. Last year alone, Netflix signed up 2.1 million new customers, who pay anywhere from $4.99 to $47.99 per month for DVD rentals that are requested online and delivered through the mail.

When Netflix delivered its 100 millionth DVD in May 2003, the service only had about 1.1 million subscribers.

Netflix success has inspired a copycat service from the nation's largest video rental chain, Blockbuster Inc., which says it has dispensed billions of movies since its first store opened in 1985. Dallas-based Blockbuster has signed up than 2 million subscribers to its online service.

But Blockbuster's challenge hasn't derailed Netflix, which is now shipping an average of 1.5 million DVDs each weekday. At that pace, it will take Netflix about 2 1/2 years to mail out its next 1 billion discs.

But it probably won't take that long, given how fast Netflix has been growing. Management believes the service will add another 1.7 million to 2.1 million more subscribers this year, leaving it with more than 8 million customers heading into 2008. Netflix hopes to have 20 million customers by 2012.

Whether the company achieves that goal may depend on how quickly major movie and TV studios de-emphasize DVD sales and rentals in favor of Internet downloads or other forms of "on-demand" delivery. If that happens, Netflix's DVD-by-mail concept could become as outmoded as drive-in theaters.

Although Netflix doesn't believe the shift to on-demand delivery will happen for many more years, management is starting to position the company for the change by offering subscribers a chance to watch a limited number of movies on personal computers equipped with high-speed Internet connections.

Stocks Tumble in Late Afternoon Trading

From Yahoo Finance

NEW YORK (AP) -- Stocks fell moderately Friday as oil prices weighed on investors' already rickety sentiment, while Treasurys rallied amid concerns about a meltdown in the subprime mortgage market.

The stock pullback followed several mixed sessions in which the tech-dominated Nasdaq composite index showed slight gains but blue chip stocks have pulled back in part amid inflation concerns. Oil settled at its highest level of the year Thursday, hurting stocks.

Bond prices rebounded from a sell-off a day earlier, as investors sought quality amid concerns that subprime lenders would be forced to book big write-downs for consumers who were unable to keep up with payments. The yield on the benchmark 10-year Treasury note fell to 4.68 percent from 4.73 percent late Thursday.

"The defaults that you're seeing in the subprime market are a bit of a wake-up call for investors. I think you're going to see a continued flight to safety," said James Sonneborn, wealth manager at RegentAtlantic Capital LLC.

In late afternoon trading, the Dow Jones industrial average was down 34.77, or 0.27 percent, at 12,651.25.

Broader stock indicators also fell. The Standard & Poor's 500 index was down 4.84, or 0.33 percent, at 1,451.54, and the Nasdaq was down 8.29, or 0.33 percent, at 2,516.65.

The dollar was mixed against other major currencies, while gold prices rose.

Light, sweet crude rose 19 cents to $61.14 on the New York Mercantile Exchange.

Blue chip stocks briefly pared some losses but remained in negative territory following comments from Dallas Federal Reserve President Richard Fisher that weakness in housing might be keeping inflation in check. He also said inflation might be showing signs of easing, according to wire service reports. The comments appeared in line with those made by Fed President Ben Bernanke last week.

Fisher's remarks follow a reading on consumer prices earlier in the week that showed inflation was higher than expected. And a pronounced increase in oil prices could also increase costs for businesses and consumers.

"Anytime we get a little bit of irritation thrown into the system the market is going to pull back," said Robert Brown, chief investment officer at Genworth Financial Asset Management, referring in part to the rise in oil prices. "The stock market is very emotional at this point. It reacts to the tiniest bit of news and turns around and reverse the direction on it."

Investors looking for direction in the final trading day of a holiday-shortened week were keeping tabs on speeches from Fisher and San Francisco Fed President Janet Yellen, who is scheduled to speak later Friday. Neither holds a vote on the Federal Open Market Committee, which sets short-term interest rates.

The speeches come as inflation concerns have infiltrated Wall Street's sentiment to a greater degree than in recent weeks. But only last week, stocks showed their best performance of the year after Bernanke testified before congressional committees that inflation was likely to moderate over two years.

"The market is latching onto the Fed speeches because there is nothing else to latch onto. It's groping for meaning, it's groping for data," Brown said.

"You've got a base of a market having ignored risk. The market has discounted risk to such an extreme. It has been driven by excessive liquidity and fantastic corporate profit growth, which is unsustainable."

The moves in the bond market follow word that some borrowers with shaky credit were struggling to pay their loans.

Earlier this week, NovaStar Financial Inc. warned it expects little if any taxable income in the next five years. The subprime lender, whose stock has fallen sharply this week, was down 74 cents, or 7.9 percent, at $8.60. Delta Financial, another subprime lender, was off 44 cents, or 4.3 percent, at $9.79.

In other corporate news, Microsoft fell 45 cents to $28.94 after a San Diego jury said the software maker would have to pay $1.52 billion to Alcatel-Lucent SA in a patent-infringement case.

Lowe's Cos., the nation's second-largest home improvement chain behind Home Depot Inc., rose $1.44, or 4.3 percent, to $35.07 after the company posted better-than-expected fiscal fourth-quarter results. Home Depot was off 20 cents at $40.98.

Rising oil prices lent a modest boost to energy stocks. Exxon Mobil Corp. rose 38 cents to $75.46, while ConocoPhillips advanced 53 cents to $67.41.

Taco Bell parent Yum Brands Inc. fell 51 cents to $60.55 after news video footage showed rats scurrying about a New York City Taco Bell.

Tekelec, a maker of telecommunications signaling devices, fell $1.43, or 9.6 percent, to $13.47 after the company's 2007 forecast was met with disappointment on Wall Street.

Declining issues outnumbered advancers by about 8 to 7 on the New York Stock Exchange, where volume came to 1.16 billion shares.

The Russell 2000 index of smaller companies was down 2.36, or 0.28 percent, at 827.08.

Overseas, Japan's Nikkei stock average rose 0.44 percent. Britain's FTSE 100 closed up 0.32 percent, Germany's DAX index rose 0.27 percent, and France's CAC-40 was up 0.15 percent.

Launch of the New Million Dollar Portfolio Challenge Blog

In honor of CNBC's new Million Dollar Portfolio Challenge, I have decided to launch a new blog:

The CNBC Million Dollar Portfolio Challenge

The action begins in less than one month!

Million Dollar Portfolio Challenge is Back

Looks like things will be kicking off on March 5th. Here's the official link to sign-up.