NEW YORK, Aug. 18, 2004 (PRIMEZONE) -- The law firm of Wechsler Harwood LLP announces that a securities class action lawsuit was commenced in the United States District Court for the Northern District of California on behalf of a class (the "Class") consisting of all persons who purchased or otherwise acquired securities of Netflix Inc. ("Netflix" or the "Company") (Nasdaq:NFLX) between October 1, 2003 and July 15, 2004, inclusive (the "Class Period").
The Complaint charges Netflix and certain of the Company's executive officers with violations of federal securities laws. Plaintiff claims that defendants' omissions and material misrepresentations concerning Netflix' operations and performance artificially inflated the Company's stock price, inflicting damages on investors. Netflix is the largest online movie rental subscription service in the United States. The complaint alleges that defendants deliberately understated the Company's "churn" rate (the percentage of its subscribers that cancelled per month) by utilizing a novel definition of churn that artificially decreased the Company's reported churn rate during quarters when the Company was adding large numbers of new subscribers. Additionally, defendants repeatedly touted the Company's impressive subscriber growth without any direct disclosure in Netflix' earnings releases or SEC filings concerning the large percentage of subscriber cancellations during the respective quarters.
On July 15, 2004, after the close of trading, the Company for the first time disclosed that while the Company had added 537,000 new subscribers during the second quarter, in the same period it had suffered 422,000 subscriber cancellations, and though the Company added 1,343,000 new subscribers during the first half of 2004, in the same period it had suffered 737,000 subscriber cancellations. In response to this news, Netflix shares plummeted 38% over the next two days.
Plaintiff is represented by the law firm of Wechsler Harwood LLP, which has extensive experience in prosecuting investor class actions involving financial fraud. Wechsler Harwood LLP has prosecuted securities, antitrust and consumer class actions for over 10 years. For more information about Wechsler Harwood LLP, please visit its website at www.whesq.com.
If you are a member of the class described above, you may, not later than September 20, 2004, move the Court to serve as lead plaintiff of the class, if you so choose. In order to serve as lead plaintiff, however, you must meet certain legal requirements. You may retain Wechsler Harwood LLP, or other counsel of your choice, to serve as your counsel in this action.
If you wish to discuss this action with us, or have any questions concerning this notice or your rights and interests with regard to the case, please contact the following:
Wechsler Harwood LLP 488 Madison Avenue, 8th Floor New York, New York 10022 Toll Free Telephone: (877) 935-7400
Wechsler Harwood Shareholder Relations Department: vsoler@whesq.com extension 283.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca.