Daniel lobe, under terms of the deal, three directors, including daniel director, originally nominated by three point, himself and Michael Wolff submitted their resignations from yahoo s board today. David ouch. National association of realtors says existing home sales fell 1. 2 after two straight months of big increases. This coincided with a rise in interest rates. But prices surged to a fiveyear high, suggesting that the Housing Market recovery remains on track. Liz troubled electronic chain, radioshack, reportedly hiring peter j solomon to raise financing. They are looking for ways to reverse falling sales and repair its image. David oil not going the way of gold. Oil finishing lower in new york trading today, closing below 107 a barrel. Traders focused on the brent premium over and continuing tensions in the middle east. Liz glaxosmithkline says some of its executives may have broken the law in china. Chinese officials, weve been telling you this since last week, accused four of the companys staff of being involved in a huge bribery scandal. David one of switzerlands largest banks, ubs, reach ad deal with u. S. Regulators after its allegedly misrepresented mortgagebacked bonds during the housing bubble. Ubs plans to take a 748 milliondollar charge as a result of the settlement. We have a busy after the bell and it starts right now. Liz we have netflix numbers and stock is falling. Dennis what happened . I havent figured out yet because it is a huge beat to the upside for earnings per share. Wall street wanted only 40 cents a share. Revenue comes in and matches wall street expectation, 1. 07 billion as wall street wanted dead on that. Is a 20 increase over year ago quarter. What is bothering investors right now . Q2 streaming revenue up 26 here in the u. S. , more than doubling internationally. They have very little on international play. They are largely a u. S. Company so far. Second quarter year ago they had earnings downside surprise and they warned for the third quarter. Well have to see what they say in the earnings call. So far we have a great beat on the upside. Wall street is more concerned with all companies in similar media space about Revenue Growth. Where is the growth . They matched revenue. Still not good enough for some on wall street apparently. David the key is really the number of subscribers. A lot of people are looking for the number of subscribers to increase. The market estimate is around 1. 5 million. Do we have any figures on that . Liz domestic streaming total subs, 30. 5 million. What is the increase . Look, ive got the mid. Was 1. 09 million new extra signups. David that is the problem. Q 3, only 630,000. David there is the problem. That is 40 miss over what they wanted. New programs would have brought a lot new subscribers and it didnt. David everybody was focusing on the number of subscribers. Again the consensus was 1. 5 million. It is well below that liz. That is probably one of the problems. Liz look at the number of subs you really get to see the issue. Lets bring in the markets panel. We want to talk more of netflix with Todd Horowitz in the pits of the cme. Lets start with you, todd. Netflix is the big name were talking about. You can see, now the stock is moderating a bit. The ask was 24. Right now it is climbing just a bit but this is a man people have been really looking at one of those come back from. They had really fallen precipitously. Theyre not still at the 300 plus dollar high they had seen in the past three years but trying to make a comeback here. Hi liz, hi david. Netflix earnings figure to go down a little bit. The stock obviously had a huge move for the year. Even last couple weeks come up from 210 to 260. The Options Market was indicating a 37 move. Were well within sight of that expected move this is long way of the final score as google was down 60, and almost came back to unchanged in the day. It was in range. Charter is certainly solid on netflix and wouldnt be afraid to buy it on level of support somewhere around 230, 235. I think it looks pretty good. It us went below the 250. Keep the bid and ask up if we can because i want to go to lance. Lance, weve seen in the past that netflix has been tar get of short sellerses. Might that be possible again, might it be the target of shorts . Absolutely. This stock has very low float. Its a favorite of High Frequency trading programs because they can really push this stock around very easily. It doesnt take a lot of money to move the stock, big dollar amount. So Program Trading loves it. What im looking for as i talked about earlier not just subscribers but look at Free Cash Flow as well. We want to see the increase in Free Cash Flow. That is one of the weak spots recently in the balance sheet. I havent had a chance to look at it but thats what i want to focus on. Liz let me get to Dennis Kneale. What are you seeing dennis. Two quick points. You would think the short seller the stock would pop up covering shorts and unless you have a whole new raft of short selling which seems doubtful in response to that. Look at paid membership. Some people worry six people are using one netflix account and almost no way they can stop counter at ttis timing on passwords. Paid mem membership, 28. 62 million that is more than a million fewer paii memberships that wall street wanted at midpoint of wall street estimates at 29. 75. So you come in at 28. 6 and wall street starts to worry even more. Liz dennis, is the outlook for q3 is 29. 4 to 31. 1 million . It is not that much more. 29. 4. That would give them a little growth especially buzz of 14 emmy nominations and gee, theyre the next hbo you would hope for some more enthusiasm. David on the other hand, todd, this stock increased 500 . It was 50 stock 12 months ago. This is extraordinary runup on the stock. Its pe ratio is 548. It has a huge pe. So there is a lot of expectations. Yeah. David remember, losses, this is a company used to be based on a pure dvd model. Theyre streaming. Lets hope it continues to do well although they dont have subscribers they want. Theyre losing confident vd business. People are not getting dvds anymore. Is that me . David go ahead, todd. I mean thats correct but, getting ahead of channel. Theyre moving forward. Keeping ahead and moving out. Amazon is trying to take this netflix model. A lot of people try to take the netflix model. They can stay with it and grow with the times. Liz we have a data point here. They have pinpointed that arrested development, bringing back that show to netflix, has added 600,000 subscribers. So 600,000 people, dennis, jumped on and started paying for netflix simply because they wanted to see arrested development. I would really like to know the math behind that how they know for certain i set up for netflix for which show. That is kind of interesting. On the dvd versus streaming business, netflix has done a far better job than most Tech Companies navigating the trapeze from the old stuff into the new stuff. In the dvd business they lost close to half a million dvd subscribers from this quarter to the previous quarter. When youre having a half a million lost on that end and bring in newer new streaming subscribers which are higher profit at some point because you dont have to mail out the physical dvd that is concern for wall street. David i want to pull back a little bit, lance. Netflix is the leading edge of the spear as we talk what will happen with stocks over the summer months. Weve seen the incredible buildup. We saw the fall down as soon as rates went up. Now that rates stablized after that pr Extraordinary Campaign the fed came out with a couple weeks ago looks like the rates have settled, what will happen with stocks . Is netflix giving us any clue what might happen to the stocks the rest of the summer . They are a little bit. One thing weve seen, mcdonalds, netflix, just the like of this is that, revenues are really starting to struggle here. One. Big catalysts we saw over the last threeyears was big Revenue Growth and big earnings per share growth and that was really behind the drive of the market as the fed was doing quantitative easing and inflating asset prices at least we had Earnings Growth to support it. The problem now that growth rate has stagnated consider considerably and pe valuations are rising. Were at 19 trailing earnings. Prices are going up but earnings are not keeping up and that is a concern to Pay Attention to at least going forward. The fact that q3 outlook for earnings is two pennys light, dennis. Exactly. One thing too about the netflix they dont control the last mile of cable. Comcast and other Cable Companies own that. That keep assbarrier of entry for netflix ultimately. Other people can get into stream but at the end. Day, comcast delivers their own movies and streaming as well. That will be a real problem potentially for netflix down the road. David we have to go to break. Dennis, one final point. Go ahead. Look at Free Cash Flow. How much cash does the company have after expansion, construction and spending. Thank you. 3 million on a billion dollars in sales that is very flimsy for a new company. Not good. David particularly when you have to make the contract deals with hollywood. 7 million they owe hollywood. David thank you very much. We have a lot more on netflix coming up. Can Ceo Reed Hastings get the stock sizzling again after this disappointment . Liz plus chipolte Mexican Grill facing some huge challenges ahead after serving up quite the upbeat earnings report. The companys chief financial sister with us to tell us what the companys financial menu is next. David also we told you about gold. Huge runup in the price of gold, over 40 an ounce today in one day alone. We want to know what you think about it. Has gold bottomed out . Has it turn ad corner . Log on to facebook. Com after the bell. Your answers coming up. [ male announcer] surprise youre having triplets. [ babies crying ] surprise your house was built on an ancient burial ground. [ ghos moaning ] surprise your car needs a new transmission. [ coyote howls ] how about no more surprises . Now you can get all the online Trading Tools u need without any surprise fees. Its notocket science. Its just common sense. From td ameritrade. Its hard to describe, because you have a numbness, but yet you have the pain like thousands of needles sticking in your foot. It was progressively getting worse, and at that point knew i had to do something. Once i started taking the lyrica the pain started susubsiding. [ male announcer ] its known that diabetes damages nerves. Lyrica is fda approved to treat diabetic nerve pain. Lyrica is not for everyone. It may cause serious allergic reactions or suicidal thoughts or actions. Tell your doctor rit away if you have these, new or worsening depression, or unusual changes in mood or behavior. Or swelling, trouble breathing, rash, hives, blisters, changes in eyesight includg blurry vision, muscle painith fever, tired feeling, or skin sores from diabetes. Common side effects are dizziness, sleepiness, weight gain and swelling of hands, legs and feet. Dondrink alcohol while taking lyrica. Dont drive or use machinery until you know how lyrica affects you. Those who have had a drug or alcohol problem may be more likely to misuse lyrica. Ask your doctor about lyrica today. Its specific treatment for diabetic nerve pain. Liz netflix just reported earnings. There were some disappointing numbers in the outlook, not on the top and bottom line but when it comes to streaming video the companys outlook disappoint ad bit. Nicole petallides on the floor of the New York Stock Exchange to tell us more. Nicole. Lets talk about what were seeing here with netflix. Netflix really a disappointment and traders walking about, netflix down 20 this is a big deal with netflix. You can see earnings per share coming in 49 cents versus 40. But the bid ask, in the 246 range. Really a disappointed despite the fact we saw arrested development and house of cards doing well for netflix. The subscriber growth, that fell short of what everybody was hoping for. Also, just the domestic streaming numbers did a complete disappointment, so well continue to follow this story. Getting beaten down. As far as the International Streaming numbers for the Second Quarter, net addition, 610 million. Third quarter total members . Not bad, 30. 5 to 31. 3 million. So that was some improvement. But obvious lit number of subscribers and just the overall numbers are really disappointing and moving the stock to the downside. David one half of what was expected t was expected to get 1 1 2 million subscribers. Less than a half that is big disappointment. For a deeper dive on Netflix DavidAaron Kessler with raymond james. Dennis kneale is still with us because he knows about all things involving entertainment. Aaron, the number about subscribers is that the one thing investors were focused on . I definitely agree. That is the important metric to focus on here. Ultimately, to justify the valuation at current levels you have to believe netflix can get 50 million plus domestic subscribers long term this is clearly subscriber story. They obviously failed to meet the highend of expectations which is why i think youre seeing the stock fall in extended hours here. Liz lets look at the numbers. They have grown to near 30 million domestic numbers and eight Million International members. I look at this, they have done so unbelievably well. They have recovered from quite the smackdown where they instituted price increases and a change in their business in a way that their customers absolutely hated. The stock plummeted. Now it is finally getting close to its alltime highs. Got a while to bo because that is up above 300 a share. The fact they have done this and the fact they have shown real innovation from getting those emmy nominations, that is historic moment, is that a pause that refreshes for the stock . Is this a buying opportunity . We dont think its a buying opportunity, around 245 range, we think it is pricing 50 million price longterm subscribers at this level. Obviously the positives, contribution margin, operating margin continue to exceed expectations here. So i think the positive theyre continuing to see more leverage. Liz when you say it hits 245, 2 a way that is a buying opportunity . Not saying that . We would be closer to low 2 hundreds before we get interested. David wow. Aaron, anecdotal information is very dangerous but i will throw some in nonetheless. I just stopped my dvd subscription to netflix. I still have the streaming stuff. But the dvds i could get at local redbox, wherever. There are a lot of people, how much is that costing them . Cash flow is very important to this organization right now particularly when adding up all the content costs. How much is loss of people like me on the dvd rentals costing the company . Yeah so the good thing for netflix they have only roughly 7 million dvd rentals left versus about 30 million streaming renters. So at this point theyre becoming less of a headwind as they lose subs an profitability from the streaming side is improving so that is helping to offset the decline in the dvd rental side. So, a couple years ago i would have said that would be a big issue but given weve seen the domestic streaming side increase in size, less liz Dennis Kneale is with us today. Dennis. Just a couple things, if you look what wall street wanted for midpoint for total members a miss more than a million. Paid members a miss more than a million. Revenue for streaming, its a miss. Revenue for streaming its a miss. Kind after surprise. Then you look at the spending. Remember that hulu, owned by the three big network companies, hulu is plowing 750 million into new spending which probably will go bidding on content that netflix now has to go after. So netflixs costs are showing up. This cryptic line, we wondered how much this house of cards helped grow membership. Netflix says that while shows Like Arrested Development which they revivedded. It had been on air and lept and they revived it originally does a great job bringing in new memberships. They say other great shows dont have that noticeable effect in their first season because theyre less established. I think what netflix is kind of admitting between the lines while house of cards won great buzz it did not boost much to boost members that come in to pay netflix numbers and build the bottom line. That emmy nomination and 14 nominations is buzzing and helps the stock price rise but at some point investors want to see the bottom line. Look at metric of netflix and hbo theyre both in almost 30 million paying hopes. Hbo 1. 4 billion in annual profit. Netflixs profit last year was 17 million that is almost 1,000th of hbo. Aaron, they will need a lot of cash. We talked about this before. All these content deals cost money, big money. Some people said forget about netflix. It will be somebody like apple with 150 on hand to pay out content. How will you pay out the content costs if youre not bringing in the money. Netflix they are starting to get better in terms how they pay for content. Theyre not signing big deals with mtv anymore. Theyre picking specific shows. Guidance which was a positive, they talked about 400 basis points of contribution Margin Expansion had year and next year which is above our estimate next year. But they promised, they changed that promise. It was 400 basis points. It used to be 100 basis points guaranteed every quarter. Well get to the 400 over four quarters. I think if anything that is a bit of a skinback by netflix. Q2 came in above. Q 4 they expect a little less. Plan to bet 100 basis points in a quarter that will be a lumpiness in terms how they pay out the deals. Liz aaron, dennis, our things. David haircut for netflix afterhours today. Well see what happens tomorrow morning. Talk about great timing gold, did you see it . David a lot of gold on the screen. Liz biggest one day gain in more than a year . Asset manager who literally just launch ad new gold fund. In the past 60 hours gave us his playbook. We have to hear white is. David good stuff. You herd the