NetFlix: DVDs by Mail

05/02/2003 12:00 am EST


James Oberweis

President, Oberweis Asset Management, Inc.

NetFlix: DVDs by Mail

"We believe that this is the beginning of a longer-term favorable period for investors in smaller, high growth stocks," says Jim Oberweis , editor of The Oberweis Report . "Between the available cash sitting in micro-cap mutual funds and increasing interest from individual investors, our suspicion is that there is a stockpile of cash waiting to be invested in micro-cap equities right now, and when the number of buyers substantially exceeds the number of sellers, prices usually go up."

"Netflix Inc. ( NFLX NASDAQ) is an online entertainment subscription service that provides 600,000 subscribers access to a library of more than 11,500 movies, TV, and other film titles. The company’s standard subscription plan allows subscribers to have three titles out at the same time with no due dates, late fees, or shipping charges. Subscribers select titles at the company’s Web site, aided by its proprietary CineMatch technology, receive them on DVD by first-class mail and return them to the company at their convenience using the company's prepaid mailers. Once a DVD has been returned, the company mails the next available title in the subscriber’s queue. Revenues in the most recent first quarter of fiscal 2003 increased 82% to $55.7 million from $30.5 million in the first quarter of 2002. Net income for the latest quarter, excluding items, was breakeven vs. a loss in the same year-ago period. These shares may be appropriate for risk-oriented investors."

Editor’s Note: In Oberweis’s no-load micro-cap mutual fund (Oberweis Micro-Cap Portfolio), they have recently experienced the biggest and fastest influx of funds since its inception. Money has come into the fund faster than they have been able to invest it. In fact, the inflows have been so strong that they announced the Oberweis Micro-Cap Portfolio will close to new investors and most existing investors effective 5/30/03.

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