Netflix (NFLX) Will Most Likely Use New Debt to Fund 'Originals' Costs
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To (poorly) paraphrase a classic Star Trek exchange:
Scotty - "I'm giving her all she's got, Captain!"
Cpt. Kirk - "All she's got isn't good enough! What else ya got?"
In the case of Netflix (Nasdaq: NFLX), the next best option is to raise funds through a debt offering.
Ahead of the bell Tuesday, Netflix announced plans to launch a $400 million senior notes offering. The Company said it would use approximately $225 million of the net proceeds from this offering to redeem its outstanding 8.50% senior notes due 2017, with the rest going to various activities.
We all know what the "various activities" part is, right? Netflix is going to need some cash as expenses tied to producing new content increase, but revenue isn't growing as fast. AllThingsD points to comments by CEO Reed Hastings with the company's most recent quarterly report, saying extra funds would provide "increased flexibility to fund future originals."
Netflix is indicated for a lower open after dropping 4.4 percent Monday. Shares are up 66 percent following strong quarterly results last week.
Scotty - "I'm giving her all she's got, Captain!"
Cpt. Kirk - "All she's got isn't good enough! What else ya got?"
In the case of Netflix (Nasdaq: NFLX), the next best option is to raise funds through a debt offering.
Ahead of the bell Tuesday, Netflix announced plans to launch a $400 million senior notes offering. The Company said it would use approximately $225 million of the net proceeds from this offering to redeem its outstanding 8.50% senior notes due 2017, with the rest going to various activities.
We all know what the "various activities" part is, right? Netflix is going to need some cash as expenses tied to producing new content increase, but revenue isn't growing as fast. AllThingsD points to comments by CEO Reed Hastings with the company's most recent quarterly report, saying extra funds would provide "increased flexibility to fund future originals."
Netflix is indicated for a lower open after dropping 4.4 percent Monday. Shares are up 66 percent following strong quarterly results last week.
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