Netflix’s tight-lipped culture makes earnings surprises hard to avoid

When some companies know that their quarterly results are going to fall short of forecasts, they put out a pre-announcement or update their guidance. But not Netflix.with no warning on Wednesday: Its customer growth was roughly half what it had projected, and Netflix actually lost U.S. subscribers during the period. That hasn’t happened since 2011, when the company made a disastrous attempt to split up its streaming and DVD-by-mail operations.

Another reason not to issue a warning: The company met most of Wall Street’s financial estimates, such as sales and profit. It was only the subscriber numbers that really came up short. There’s also been a broader shift away from giving earnings warnings, said Huber Research Partners founder Craig Huber.

Those kinds of data services failed to predict the latest shortfall, Wolfe Research analyst Marci Ryvicker said in a note.“For several days,” she said, “investors told us ‘such-and-such data service suggests domestic adds will come in line; while international might be somewhat soft.’ Wrong. I mean — right in the sense that international was soft, but totally wrong on the domestic subs part.”

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