Film & Television

After issuing a new round of stock to raise $400 million, Netflix acknowledged in an SEC filing that it projects losing money in 2012.Netflix continues to struggle to stabilize after it rocketed to darling status following its IPO. The stock is now down nearly 70% from its highs and is headed down again today after issuing new stock to raise approximately $400 million. In addition to the new offering, the company also acknowledged in a filing with the SEC that it projects to lose money for the full operating year of 2012.

Apparently, international expansion costs have been higher than anticipated and the backlash and subscriber loss from its US customer base has also been greater than the company projected. Although it now appears as though Netflix will continue to operate in a manner that is familiar to its once-loyal subscriber base, the company is being challenged on all sides as it tries to re-establish itself as the dominant player in streaming and rental video content.

The costs to license the content from major production companies is only going to get higher as more services like Netflix gain traction. Already, Amazon is offering a competing streaming video service that it bundles with its premium Prime package for its online consumer base. With Apple, Hulu and the content producers themselves lurking in the shadows, it may only be a matter of time before Netflix becomes a ripe target to be acquired by a company who can provide and control all the content - and then use Netflix sales channels to dominate a market segment.

The company is safe for the moment, but this latest round of stock issuance raises concerns about its liquidity, and whether or not it is well-positioned to endure the long slog that appears to be ahead of it as it tries to return to a position of strength.

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