Netflix notes bring in $400M


Two long-term investment firms, T. Rowe Price Associates Inc. and Technology Crossover Ventures, each made $200M investment in Netflix, giving the company cash to continue to grow the business and bolstering the company’s balance sheets.

$200M came via the registered sale of common stock to funds/accounts managed by TRP; and another $200M was raised via convertible notes to funds affiliated with TCV.

“With this additional capital from two long-term oriented investors, we have strengthened our balance sheet and remain focused on growing our streaming subscriptions and returning to global profitability after our launch of the U.K. in 2012,” said David Wells, Chief Financial Officer.

After expenses are deducted, Netflix expects to net $397M from the offerings.

Anthony DiClemente of Barclays Capital said, “We believe this capital infusion enhances NFLX’s financial flexibility and also may represent a vote of confidence from prominent long-term investors.”

In rating the issue positively, DiClemente said, “We believe earnings are unimportant to the stock in the near-term and that downward revisions are unlikely to affect valuation. More importantly, we are maintaining our revenue and subscriber estimates for 2012 and continue to believe in the long-term strategic value of the Netflix subscriber base.”