Their licensing costs. And even then, that's a proforma FY2012 guess from an analyst that's not affiliated with the company. It's worth asking if Wedbush Securities has a short position on NFLX.

This is a company that operates dozens of physical warehouses, employs thousands of people, and pays an astonishing amount in postage fees.

Their licensing costs are surely just a fraction of their bottom line.

According to Netflix's 2010 SEC filing, their operations expenses are around $400 million. Adding in development, marketing and general administrative costs, their total non-license costs were around $800 million.

They paid $1.2 billion in licensing costs. It's their most expensive cost, by far.

That includes their physical disc's, doesn't it?

The post I replied to -- and my reply -- was addressing streaming licensing:

Pachter predicts Netflix's streaming content licensing costs will rise from $180 million in 2010 to a whopping $1.98 billion in 2012.

In other words, of that $1.2bn you quote from their 10-K, 1.02bn was physical discs.

You've got that the other way around. In 2010, Fullfillment Expenses cost them 9.4% of their revenue, Cost of Subscription cost them 54% of their revenue.

> It's worth asking if Wedbush Securities has a short position on NFLX.

It doesn't look like they take positions themselves. They seem to be your standard financial services broker/dealer, in which case they do research for clients who take positions.

It's likely they have a "Sell", or at least "Hold", rating if they're writing negative notes. But that's as it should be; I think you have the causality backwards in your implication.