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Netflix has no debt and its Board of Directors has authorized an aggressive $100 million common stock buyback through the end of 2008.  Netflix has a very strong balance sheet and the stock buyback will only increase the firm’s value for its shareholders.

Yahoo Finance link to Netflix Balance Sheet.

Netflix generates plenty of free cash flow.  The negative cash flow shown for 2007 is due to the aggressive stock buyback and investment activities.  Netflix is investing heavily in the development of its Internet-based movie service.

Yahoo Finance link to Netflix Statement of Cash Flows

Fourth-quarter revenue of $302 million was up 9% from the prior-year quarter.  For the full year, revenue grew 21% to 1.2 billion.  Excluding a one-time gain related to a legal settlement, the operating margin improved slightly to 7% from 6.5% a year ago.

Yahoo Finance link to Netflix Income Statement

During 2007, Netflix continued to fend off the competition, namely Blockbuster.  Blockbuster was successful in 2007 in attracting new customers with its Total Access program.  However, this was costly and Blockbuster was eventually forced to raise prices and lower is marketing spending to focus on profitability.  Netflix has lowered its prices to complete with Blockbuster and others.

Yahoo Finance link to Netflix Industry Comparison.

For further detailed information on Netflix finances and investor relations visit the Investor Relation portion of the Netflix website.