Netflix subscriber growth slows dramatically

The internet video serviceNetflixreported subscriber numbers late Monday that missed the company's own guidance by a wide margin.

The company releasedsecond-quarter earnings that showed it added 1.7 million subscribers in the quarter 160,000 in the U.S. and 1.52 million internationally.

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That wasfar short of guidance the company issued in April, when itforecast an addition of 500,000 new American subscribers and two million internationally.

Management of the video streaming serviceblamed the poor performance in the April-to-June quarter on cancellations by subscribers facing price increases of as much as $2 per month as a two-year rate freeze expired.

"We are growing, but not as fast as we would like or have been," Netflix CEO Reed Hastings wrote in a letter accompanying the Q2results. "Disrupting a big market can be bumpy, but the opportunity ahead is as big as ever."

Earnings top forecasts

Despite missing expectations on the subscriber front, the company managed to report earnings per share of nine cents, beating the consensus forecastof two cents a share from analysts surveyed by Thomson Reuters.

"The earnings upside was from lower spending on technology and marketing," said Wedbush Securities analyst Michael Pachter in remarks quoted by Reuters.

Second-quarter revenues were $2.11 billion US, matching analysts' expectations.

Looking ahead, Netflix saidit expects to add 300,000 subscribers in the United States during the July-to-September quarterand twomillion outside the U.S.

"Our global membership forecast for Q3 includes an impact from the spectacle of the Olympics," the company said in a quarterly letter to shareholders.

In after-hours trading, Netflix shares plunged more than 16per cent to $82.59US by 4:30 p.m. ET. The shares had closed at $98.81 US in regular Nasdaq trading on Monday.