u.s. >> it didn't face a grandfather choice. >> ungrandfathering. >> ungrandfather. >> ungrandfathering. i'm wary of words spellcheck won't check off on. it dominated everything on the call last night. as price increases were about to hit long-time subscribers who were grandfathered at a lower price, they didn't reup. price mattered. in other words it seems like fewer of a pending price increase made netflix's u.s. numbers weak. i found myself thinking at least they didn't lose any from ungrandfathering. the price never mattered before this. netflix is part of the holy trinity of memberships. people will pay more for costco. they jack it up. do i care? no. pay, pay, pay. amazon prime? i would pay 50% more. netflix? no longer the case. we don't know why these people decided not to reup. in the enough talent, movie, production? why? it didn't seem like netflix knew either. i'm baffled about this. can't figure out why they aren't reupping. it's not much money versus how much the cable bill is going up. i didn't get the last miss either when netflix blamed australia. i didn't get it when th

reed hastings has been on after the result talking about this ungrandfather. it's basically the price benefit or the inducement you had to get and sign up for netflix is coming off and coming off for a lot of domestic subscribers. down 70%. so these are atrocious relative to the internationals. i would point out if you think about where netflix has gone over the last two quarters in domestic, think about where we were a half year ago in the growth story even in this country. off the charts. there is competition, a lot of it, and if you watch netflix, half -- this is telling me half the people that watch it are watching for stuff they could get on hulu, on amazon, any other place. >> there are competition fears. also people are holding back because they don't know what that unraveling is going to look like with the cable companies. they don't know what the skinny bundle is going to look like or what the real competition price is going to look like. >> do most people who watch netflix analyze it at that sort of level? >> i think they look at what they watch and

the ungrandfathering effect worse in the third and fourth quarter and get ready for more of this.o shrug it off, international, no way they have the same adoption that they have had in the united states. so trading at 40 times 17 ebitda this stock should be lower. >> julia has more for us. julia? >> just a quick nugget on china because many analysts believe it's the next big frontier for netflix and the regulatory climate is challenging and disney launched was closed down as was apple's movie offering saying we explore options and meantime work in the newly opened markets and goes on to say there's no change in their view that in the u.s. netflix can reach 16 million to 90 million members and optimism about the potential here and very cautious on china. >> all right. we'll have more on netflix in a bit, too. ibm, see how the sharyls moving as the earnings are now out and susan li with the numbers. >> hi. we got a bet on the top and bottom lines and eps basis and 295 apiece. the market looking for 289. revenue beats at 20 billion. we were looking for 20.03 billion in the estimates

they talked about ungrandfathering, which is a word if you check that, that they created last night. any time -- you know, of course we un-grandfathered him. spell check wouldn't let me have it. this was -- when i say "baffling," the people who didn't re-up, were people who were -- it was people who were afraid of the price increase. now, what this says is, i've always felt there's costco, amazon, you pay for the prime. people didn't pay for netflix going on. >> right, they had more churn than may have been participated and they added fewer subscribers domestical domestically, and internationally, and as importantly, their guidance below the current quarter is below what much of the street and the investors anticipated. >> it's toriberrible. >> in terms of u.s. and economic. >> us 160,000, and guiding 300 more? >> next quarter is bad, too. >> i think people are looking for half a million. >> customer loyalty, thing, fpr used that, rbc, multiple negative catalyst. >> come on, when reed hastings says everyone -- the big picture is everyone is using internet video, internet television m