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Netflix shares plunge 13% on disappointing guidance

Netflix CEO Reed Hastings.

Paul Sakuma/AP

Video rental company Netflix Inc. reported a first-quarter loss that was not as steep as Wall Street feared but shares fell after disappointing guidance for subscriber additions next quarter.

Shares dropped 13.6 per cent in after-hour trading from their earlier close at $101.84 (U.S.).

Investors are concerned about the company's guidance for subscriber additions in the second quarter, said Wedbush Securities analyst Michael Pachter. Netflix said its net domestic streaming additions in the second quarter would be below 2010's second quarter, though it expects the total for the year to be "about the same as in 2010."

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"They are giving a signal to the Street their growth story is over," said Pachter, who rates Netflix a "sell."

Netflix posted first-quarter revenue of $870-million, up 21 per cent from a year earlier. Net income fell, and the company reported an earnings loss of 8 cents per share. Analysts had expected a loss of 27 cents per share, according to Thomson Reuters I/B/E/S.

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