Netflix shares are down over 27 % after hours.

The good news — earnings of $62.5 million, or $1.16 a share, up from last year and beating expectations — is being drowned out by the number of subscriber defections, about 800,000 from Q2 to Q3.

The Los Gatos-based company took the unusual step of offering a “Letter to Shareholders” (pdf) along with its earnings release.

“The last few months have been difficult for shareholders, employees, and most unfortunately, many members of Netflix…(W)e greatly upset many domestic Netflix members with our significant DVD-relating pricing changes, and to a lesser degree, with the proposed-and-now-cancelled rebranding of our DVD service,” the letter says.

Netflix Shares Plummet 27% on Subscriber Numbers 24 October,2011Jon Brooks

  • Sheila Norman

    What is up with Netflix’s management? They have written the perfect strategy on how to loose customers. Provide a needed service at a reasonable cost. Then raise the cost for use and lower the quality of the product provided. Huh?

  • Elisabeth Handler

    I’ve been trying to quit my subscription but spent too long on hold and I couldn’t find an “unsubscribe option on the website… hmm.

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