Solid Numbers at Netflix Fail to Impress

Jul 23, 2013 8:06am

Morning Business Memo…

When is really good not quite good enough? Answer: when you’re Netflix. The company issued excellent second-quarter numbers, but its shares fell more than 5 percent on the news. Netflix says its earnings were four times as high as last year as sales jumped 20 percent. But the downer for some investors was the number of new subscribers – up 630,000, which is impressive, but not as much as Wall Street analysts looking for. “The larger we get, the harder it is to grow,” says CEO Reed Hastings. Netflix now has more than 28 million subscribers.

It’s a busy week of corporate earnings reports, and more are coming out today. They include Apple, which reports after the stock market closes. Analysts predict Apple will say it’s making less money as more customers buy its lower-priced iPhones and iPads instead of the top-of-the-line models. Some consumers are bypassing Apple products altogether. The results may show why investors are clamoring for Apple to come out with another trend-setting device.

Many first-time homebuyers are being shut out of the housing recovery. They usually account for about 40 percent of home sales, but in recent months that number has dipped to around 30 percent. The falling share of first-timers means many younger buyers have missed out on the historic dip in interest rates. Higher prices and restrictive lending prices by banks as well as a weak jobs market are factors. “Home prices continue to roll,” says Walter Maloney of the National Association of Realtors, who cites “seven straight months of double digit gains over the previous year.”

Gas prices are on the rise with the cost in most states at a five-year high. The US Energy Department says the average nationwide rose to $3.68 a gallon – an increase of 5 cents in the past week. The price of gas may go up a bit more in the next few weeks. But that trend may not last long. “We’re very close to a summer top for gasoline and these prices are a little bit frothy,” says Tom Kloza, a senior analyst at Gasbuddy.com. “Generally we’ve seen prices go up on gasoline because crude oil prices have moved up.” Kloza says there’s a speculative bubble in futures markets. “I think the disconnect will disconnect, frankly I think we will see lower gasoline prices in the last 100 days of the year.”

A big bounce for precious metals. Gold prices rose more than 3 percent – their biggest gain of the year. The move was driven by physical demand from Asia, as well as investors betting that the Federal Reserve will continue its intervention in the US economy, analysts said. Gold for December delivery jumped $43.30 an ounce to $1,337.30. Silver jumped 5 percent. Copper and platinum both rose more than 1 percent.

Richard Davies Business Correspondent ABC News Radio abcnews.com Twitter: daviesabc

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