Of the bright spots today, nasdaq up 12plus points. Were still about a 13year high for the technologyheavy composite there. Kelly . The focus shifting immediately to netflix. Earnings there are due out shortly. Until we get them, lets break down what happened on wall street. Joining us now, jim moffett, jeffrey from Raymond James and michael from destination wealth management. Gentlemen, thank you for joining us. Thank you. Jim, lets start with you. Look, thoughts on the day. Weve seen this theme now for a couple of trading sessions, where stocks are actually paring their losses throughout the session. Does that tell you real money isnt participating here . I think the trend is going up both in the United States and around the world. All right. Im sorry, jim moffett, i have to interrupt you briefly because we have netflix numbers. Julia, how do they look . Well, bill, earnings per share coming in better than expected, coming in at 49 cents per share. Thats up from 11 cents in the yearago period and beating analysts expectations. Revenue right in line with projections at 1. 07 billion. Another key number is the total number of members in domestic streaming. The number for q2 is 29. 8. Thats sort of the midpoint of the guidance that netflix gave last quarter. And then, the other key number here is the number of paid streaming members. That is 28. 62, and that is at the high end of the guidance the company gave last quarter. But it is a little bit less than what wall street analysts had been expecting. Another key thing here i want to point out is that the Company Free Cash Flow swung to positive. There was 13 million in Free Cash Flow. The prior three quarters did have negative Free Cash Flow, so thats a positive. Were going to continue to dig through here and ill be back as soon as i get more, bill. All right. Thank you very much, julia. Let us know anything else you hear. Lets bring in our analysts on this one, as you see the stock sort of zigging and zagging and coming off the lows now, down about five points in the after hours. Mike of piper jaffray, david pearl of epic Investment Partners and ed williams of vmo Capital Markets is with us here at the big board. Anything you heard of note from her just now . I think the key thing for me is that the you know, looking at the earnings numbers, the subscriber numbers, they came in line, or better than what we were looking for. You know, what would be helpful to get a sense on is the outlook, looking into the september quarter. Yeah. Guidance is always key here, isnt it . Yeah, david pearl, what about you . Well, we have a different take on it, frankly. We look for companies that is sustainable competitive advantage, and generate profit from that. And this company, its a bit of a conundrum. They dont control much of their content. They dont control the distribution. And up until at least this quarter, well see, they were cash flow negative. So actually, they have to borrow money to continue to grow. So we have to think about the valuation in terms of the opportunity here. Because you can sell a dollar for 90 cents. We really have to see if the Value Proposition is such that they can make money as content costs continue to go up versus the revenue. Right. Yeah, what about we see the stock is coming back here, now down 3 . Mike olson, what about that . In your view, is it too early to tell whether house of cards has been a success, especially given the tremendous response from the emmys over the weekend . Yeah, i think the companys going to get a free pass on the nearterm numbers in the sense that people want to see subscriber growth, but theyre also going to understand that some of the original programming isnt going to translate immediately into new subads, so theyll have multiple shows coming out. So far batted essentially. 1000, and well have to see over the next few quarters how that plays out as far as new shows coming and whether they are able to attract and reduce subscriber churn. Shares are now down about 4 . Julia, still looking through the Earnings Release. Anything more you can tell us . Reporter well, something just to weigh in on that comment about subscriber additions in the commentary here, in the letter from ceo hastings, he said that arrested development had a strong because of its strong brand and fan base, generated a, quote, small but noticeable bump in membership when it was released. It said none of the other show has that noticeable effect in their first season because theyre less established. Apparently, of the four shows to companies so far, that one was the big impact here. There is some news in here, the company says it will be expanding its original as initiative to include, quote, broadly appealing feature documentaries and standup comedy specials. Thats in addition to, of course, the types of series Like Arrested Development and house of cards. Looking at the q3 guidance, they are projected domestic streaming members between 30. 5 million and 31. 3 million. Of course, thats up from 29. 8 million. And of those, the paid members are expected to be at most 30. 1 million. Now, looking at their project n projections for q3 earnings per share, theres a pretty wide range here. They say it will be between 30 cents and 56 cents per share. So very, very wide range in terms of eps. And ill continue to dig through and see what else we can find. Back over to you. Ed williams, you grabbed your notes. How do they compare with what you were expecting . Looking at the guidance, the september quarter, generally speaking, i think were kind of closer high end of the range of what theyre looking for. But its you know, to me, it seems fine. The key thing at this stage is once you get your subs, its matter of the ability to keep them, keep the churn low, and actually then drive that profitability for the business. The increase in production costs, does that worry you . It has to. Like, one of the key things is that the the company has to spend mervly on this content. And you have to make sure its efficient what they spend. One of the things we have to keep an eye on is making sure theyre able to get a decent return on the investment. Are you surprised arrested development seems to be one of the key factors behind the subscriber growth . To me, no. Because i think its a known entity. If you look at whos actually out there, whos aware of the content, arrested development is something people knew about, and that season four is available exclusively on netflix. It doesnt strike me as a surprise it would lead to a bump. Mike olson, we talked earlier about the strategy theyre pursuing could be considered hbolight s that a good idea in your view . Is it a fair analysis, as well . Yeah, i think its fair. Theyre pushing that direction, like julia mentioned, doing some unique originals in the future, it sounds like. And i think what it translates into is you get into kind of a maintenance mode of content spend for some of the nonexclusive or older tv series and movies. And if that happens, and theyre able to kind of take all of the incremental content spend that theyre pushing into, you know, original programming, if it continues to have the success that its had, then that can definitely be positive for retaining subs and adding to subscribers. David pearl, what do you think about netflix trying to innovate with regard to the Earnings Release itself . The stuff theyre doing today, the stuff theyve done throughout time . Is this because they view themselves as a company that innovates across across the sector . Or, you know, as an investor, do you like that, or is it frustrating . No, investors like transparency, and this clearly does not aid this, because the questions are selected by the company, so its not a really live q a. It is not what we would prefer. I have nothing against video, but you need to have live questions. Its being hosted by an analyst who has a buy on the stock. So, you know, it just doesnt feel right to us. You know, a lot of the metrics we used to use, separating out some of the dvd versus streaming business is also less transparent than it used to be. Right. Well, i tell you what, lets bring julia in. Youll be a part of the Conference Call. What do you think . Thats right, bill. I want to clarify. The company is not selecting the questions. In fact, they have no idea what questions i and richard greenfield, who is an analyst, will be asking. Weve solicited questions via email. Email me or tweet m me jboorstin. Weve gotten a flood of questions, especially today. And weve seen a lot of overlap in the question topic, but we are going to try to address every single topic and sort of the variety of question that has been raised. So the company has no input in what questions are asked. Okay, david, what about that . Well, you know, its better than nothing. But it is not the same as a realtime answer to a direct question. So, you know, well just see how whats your biggest whats your biggest question for netflix . Well, to me, its a treadmill. If they become, like, hbo, theyre going to have to increase original content costs, which is extremely expensive. And, by the way, up till now, they only have a window with each of these series. So they only own arrested development for the first window, then they have to repurchase. So its an expensive proposit n proposition, and the real question is, can they become a truly Profitable Company looking at Free Cash Flow . And were not clear on that. Well, theres a question for you to ask, julia. Courtesy of david pearl. Well take a quick break, well be back with much more on netflix and the day in the markets, coming up in just a moment. Stay tuned. Looking at covered call strategies to generate income . With fidelitys options platform, weve completely integrated every step of the process, making it easier to try filters and strategies. To get a list of equity options. Evaluate them with our p l calculator. And execute faster with our more intuitive trade ticket. Im greg stevens, and i helped create fidelitys options platform. Its one more innovative reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. Lets get right back to netflix, watching the stock whip around after results out a few minutes ago. Julia boorstin has been combing through the report. Julia is comoderating the Conference Call in just a few minute, which you can also follow on cnbc. Com. Julia, a couple of thoughts on why shares are trading down sharply . Reporter well, the earnings per share did come in better than expected, 9 cents better than expected at 49 cents instead of 40 cents. I think the reason why the stock is trading lower comes down to the q3 guidance, and the fact that theyre not anticipating that dramatic subscriber growth, and perhaps most important, the fact that the eps expectations are very wide range. The company says earnings per share in the Third Quarter will range between 30 cents and 56 cents. Thats a very wide range. Its not atypical of netflix, but its a wide range and indicates potential instability in the quarter. And the company says that the most domestic streaming subscribers they would see at the end of the next quarter would be 31. 3 million. Now they have 29. 8 million. So thats thats less than 2 million additional subscribers. So there are various factors at play here. And the streaming subscribers did come in sort of at the mid or high point of guidance for this quarter. But i think investors are concerned looking forward to the next quarter. Lets talk about the Conference Call itself. David pearl, you mentioned some frustration on your part, the format and whether or not your questions will be asked. What about you, ed . Are you concerned about the information that will be imparted in a Conference Call like that. It certainly is an unusual Conference Call. And i think looking at you know, well find out, and i think as david pointed out, part of the challenge is you cant ask a question and get the unburnished reaction. Were relying on an intermediary. The key thing to julia and rich is to follow up. Thats Something Different theyll be able to do that we otherwise couldnt do. They can grab and answer and dive deeper into it as its appropriate. Are you able to do that, julia . Sorry. Reporter yes, theyve told us well be able to ask followup questions. We certainly intend to. One thing im curious about is how much time total well have. We do have a lot of questions here. It sounds like theyre setting aside 45 minutes for the call and it will be interesting to see how quickly we go through the questions, because we do plan on asking followups. Mike, how effective we all kind of joke about analysts calls, a lot of times anyway, the kind of great quarter guise, the scenario, the analysts chosen to ask the questions of the company. Is there as much concern about the old way of doing things as the new . Or is there just more questions again about why netflix is pursuing this route . Yeah, i mean, i think the preference would be that analysts are able to ask questions live just so you get that kind of backandforth immediately. I think ultimately, though, youre asking earlier what key questions are. I think the key question is an unanswerable one, which is can you continue to bat. 1000 on original programming . And thats really the question that we have, and i think a lot of investors have, and thats going to be a key component of the success for netflix over the next several quarters and several years, really. Another question there for you, julia. Why are they doing it this way . Lets all recall, it was Reed Hastings who got his wrists slapped for what a facebook posting when he put up information about the company, some people cried foul, and the s. E. C. , they had to kind of modify their rules on how information Material Information about a company would be disseminated to the public out there. So why this format for the Conference Call . Reporter well, ive asked them that, and i intend to ask them that again today on the call. And they say its because they just want to make it a more open call and bring in a wide arrange of investors, and in a traditional Conference Call, you have analysts asking the questions. That leaves out a lot of people. It leaves out everyday investors who have emailed us questions, people who may own 100 shares, and want to know where the stock is going. And leaves out the category of hedge fund positions, who maybe want to short, or they dont want to reveal what their position is with a pointed question. So those people now can feel comfortable emailing in questions that they might not want to ask otherwise. David pearl, do you want to respond to that . Well, again, well just have to wait and see. Again, theres no question the current standard is that the company basically orders the call. So they have some discretion about who gets to ask a question. Which is suboptimal, as well. But on the other hand, you really would like a trained analyst, who has gone through the numbers, to be asking the question, no offense to cnbc. But it would be just more in depth directly from the analyst. Well, you do have an analyst cohosting this thing with you, julia, right . Reporter thats right. Btids rich greenfield. One thing i want to point out, and i have gone through i will continue to go through the numbers and do have some experience reading these reports, is the fact that a lot of the questions that have been emailed in are on the same note. Were getting a lot of very similar questions, and its i think we will be able to address all of the major topics. And there isnt a massive amount of variability between what people want to hear answered. So i think that we will be digging in and we will be its just my job as a journalist to ask questions, so i hope to be able to do that coming up in a couple of hours. Were with you on that one. Gentlemen, this stock is the best performing component of the s p 500 so far this year. Up 184 . I mean, by far its the best performer. Ed williams, should it be and how do you view the stock . Go around the horn very quickly on whether you would buy the stock at these levels, or not . To me, its a little too rich. Its a great company, but they have a valuation thats not warranted right now. Okay. David pearl . Yeah, to echo ed, it has the valuation of hbo just about right now. And its near not nearly as profitable. So again, its a great company. Its clearly popular. The question is, can they make money, and again we look at Free Cash Flow, it just hasnt been there. Mike olson . Yeah, the valuation is steep, but its also, you know, by far, the best Online Video Service provider. And i think i hate to keep harping on the original content theme, but i do think if they continue to do well on that front, itll basically give them the leverage to potentially increase pricing, and if we look at a price increase in 2015, you know, even way out there, a dollar price increase, it can materially increase the earnings per share. Okay. Shares are off about 5. 6 after hours. Mike, david, ed, thank you very much for your time. Julia, we know you have to go. Appreciate all of your thoughts. Julia will be comoderating the call starting about 6 00 p. M. Eastern time. You can catch all of the action on our live stream, as well, at cnbc. Com. An interesting experience, experiment, too, by netflix. All right. More coming up. Thats right. Barney frank. He may be retired from congress, but hes not actually shy at retiring. The law that bears his name takes arrows from both sides of the aisle. Up next, he goes to bat for doddfrank, and what it will ultimately mean for banks and businesses. Plus, well get his reaction to the steve cohen s. A. C. Charges. And more from london. You probably have heard by now, a prince and future king was born earlier today. Well have more on that coming up as well. Golden opportunity sales event and experience the connectivity of the available lexus enform, including the es and rx. This is the pursuit of perfection. announcer scottrade knows our and invest their own way. With scottrades smart text, i can quickly understand my charts, and spend more time trading. Their quick trade bar lets my account follow me online so i can react in realtime. Plus, my local scottrade office is there to help. Because they know i dont trade like everybody.