Netflix loses 800,000 U.S. subscribers
SAN FRANCISCO — Netflix's video subscription service lost 800,000 customers in the third quarter - the biggest exodus in its history — even as its earnings rose 65 percent.
The losses were larger than management had previously warned. The unwelcome surprise, contained in financial results released Monday, was compounded by a forecast calling for millions of Netflix Inc.'s DVD-by-mail subscribers to cancel the service in reaction to dramatic price increases that took effect last month.
The bad news bruised already-battered stock as the shares plunged by more than 26 percent.
Netflix lost its luster among consumers and investors by raising prices as much as 60 percent in the U.S. and bungling an attempt to spin off its DVD-by-mail rental service.
The company, which is based in Los Gatos, Calif., ended September with 23.8 million U.S. subscribers, down about 800,000 from June. Netflix had predicted it would lose about 600,000 U.S. subscribers in a forecast released last month.
Management expects to gain U.S. subscribers in the current quarter, although Netflix didn't set a specific target. But a substantial number of Netflix's customers are expected to choose between renting DVDs through the mail or streaming video over high-speed Internet connections instead of paying for both services.
Netflix earned $62.5 million, or $1.16, per share, in the third quarter. That compared to income of $38 million, or 70 cents per share, at the same time last year.
Lawmakers to consider oil pipeline challenge
LINCOLN | Nebraska Gov. Dave Heineman says he'll call a special legislative session for lawmakers to consider challenging the planned route of a massive transnational oil pipeline.
The Republican governor's Monday decision means Nebraska doesn't intend to just leave the matter to the federal government, which is expected to decide whether to approve the $7 billion Keystone XL Pipeline project by year's end.
Pipeline opponents sought the special session to consider a proposal that would have given the state control over the pipe's route. Mr. Heineman acknowledges the proposal is likely to face a court challenge.
The 1,700-mile Keystone XL pipeline would travel through Nebraska and five other states. Supporters say it could reduce U.S. dependence on Middle Eastern oil, while environmental groups say a spill could cause an ecological disaster.
Judge sets Le-Nature's restitution at $661M
PITTSBURGH — A federal judge in Pittsburgh says the former CEO of soft-drink maker Le-Nature is responsible for $661 million in restitution to investors, vendors and lenders who lost money in a massive fraud.
Senior U.S. District Judge Alan Bloch sentenced Gregory Podlucky on Thursday to 20 years in prison for masterminding a scheme to inflate the company's revenues to attract additional financing. But Judge Bloch left open the matter of restitution.
The Pittsburgh Tribune-Review first reported on Judge Bloch's restitution ruling, which was issued Monday.
Podlucky claimed a consortium of lenders led by Wachovia Bank weren't victims of the $684 million scheme, saying they withdrew $258 million in bankruptcy claims for a loan not repaid after Le-Nature's 2006 bankruptcy. But the judge agreed with prosecutors, who argued Wachovia, alone, withdrew a $23 million claim.
Podlucky and five other executives are expected to repay a fraction of the amount owed.
Appeals court orders new trial for scientist
NEW YORK — A new trial has been ordered for an Ivy League-educated scientist convicted of violating the Iran trade embargo.
Mahmoud Reza Banki was sent to a federal prison camp in California after his June 2010 conviction in New York.
The 2nd U.S. Circuit Court of Appeals in Manhattan ordered the new trial Monday.
The Tehran-born Banki was convicted of violating a trade embargo. It prohibits U.S. citizens from supplying goods, services or technology to Iran or its government.
The appeals court tossed out the trade embargo charge. It ordered a new trial on charges that he participated in an unlicensed money transfer business. False statement charges were upheld. A hearing has been scheduled for Nov. 9.
• From wire dispatches and staff reports