Wednesday, December 5, 2007

Postal Rate Change Set to Cost Netflix 66% Drop In Income Per Subscriber

An audit prepared by the Postal Service Office of the Inspector General (OIG) has concluded that the soft leading edge on 70% of NFLX's return mailers...get stuck during sorting and require manual processing and added about $21 mil in annual labor costs. To combat [this], the OIG has recommended imposing a 17 cent surcharge on each mailer. If NFLX has to bear the full brunt of this increase(without other cost offsets), monthly operating income per paying subscriber would fall 67% from $1.05 to $0.35.
http://www.alleyinsider.com/2007/12/postal-rate-change-to-wallop-netflix-help-bbi-nflx.html

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