Ten Hidden Gems in the Netflix Annual Report (NFLX, TWC, CMCSA, DTV, SATS, T, VZ, AAPL, AMZN, GOOG, BBY, WMT, CSTR)

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Netflix Inc. (NASDAQ: NFLX) recently joined the waves and waves of public companies which filed their 10-K annual reports with the SEC.  We often dig through these and other reports to find tidbits that most investors do not take the time find on their own.  Some of these risks and data points are actual risks, while others are just not commonly known points which investors should keep in mind when they are deciding to invest in these companies.

Streaming versus mail… In 2010, Netflix passed a significant milestone with the majority of its subscribers viewing more of their TV shows and movies via streaming than by DVD.

Competition… Netflix considers just about everyone short of movie theaters and radio stations as competition.  In cable: Time Warner Cable (NYSE: TWC) and Comcast Corporation (NASDAQ: CMCSA); in direct broadcast satellite providers: DIRECTV (NASDAQ: DTV) and Echostar Corporation (NASDAQ: SATS) in telecommunication IPTV providers: AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ); Internet movie and TV content providers: Apple Inc. (NASDAQ: AAPL) for iTunes, Amazon.com Inc. (NASDAQ: AMZN), Hulu.com and Google Inc. (NASDAQ: GOOG) for YouTube; DVD rental outlets and kiosks: Blockbuster and Coinstar Inc. (NASDAQ: CSTR) for Redbox; and retailers such as Best Buy Co. Inc. (NYSE: BBY), Wal-Mart Stores Inc. (NYSE: WMT), and Amazon.com Inc. (NASDAQ: AMZN). What is interesting is that while Amazon.com shows up twice in ‘competition’ is that Netflix also utilizes the services of third-party cloud computing providers from Amazon Web Services and others.

The calendar… Many might not consider this to be the case, but there is seasonality to the business.  The higher growth quarters are Q4 and Q1 from October to March.