Shares in Netflix plunged 27% in the US after the online streaming service reported the loss of more than 800,000 subscribers, and admitted its launch in the UK and Ireland in early 2012 will push it to a global net loss.

The one-time internet darling bore the brunt of negative investor sentiment after a summer of discontent among subscribers as it reported its results for the three months to the end of September late on Monday, despite meeting the expectations of most financial analysts.

Total revenue rose a healthy 49% year on year to $822m while net income surged 63% to $62m.

Nevertheless shares in Netflix, which had been trading at $300 in mid-2010, fell 27% in after-hours trading to $86.84.

Netflix was cautious about its prospects in the UK and Ireland when it launches in the first quarter next year, a move that the company admitted will push it into a global net loss for the first quarter.

In a letter to shareholders the company said it intends to launch an "aggressively priced, compelling service" but admitted that a highly competitive UK market, with rivals including BSkyB, Amazon's LoveFilm and the BBC iPlayer, is likely to mean it takes more than two years to reach profitability.

"UK members will subscribe to Netflix and to other entertainment offerings," said chief executive Reed Hastings and financial officer David Wells in a joint letter. "We have to attract and retain subscribers efficiently enough to be able to generate a profit. While we normally target two years to profitability, with the increased competition in the UK relative to Canada, we anticipate it may take longer. We'll know more after our first two quarters."

Netflix intends to pause its international expansion after the UK and Ireland launch until the business is able to return to global profitability.

"By pausing on further international expansion and halting buybacks, our current cash on hand is adequate to support the growth of the business," the duo said.

The company has experienced a torrid time since July when a poorly handled decision to significantly ratchet up prices and an ill-fated plan to split its DVD rental and online streaming businesses was announced. Earlier this month the plan to spin off the DVD rental operation and rebrand it as Qwikster was dropped.

On Monday Netflix reported that 810,000 subscribers had left the business in the third quarter and said the customer exodus is set to continue until December.

It was a dramatic turnaround in light of the fact that the company had added more than 1 million subscribers in each of the past seven quarters.

However, the company said cancellations "peaked a few weeks ago". It predicted that in the fourth quarter the net additions will be "slightly negative" overall although December is expected to return "strongly positive" numbers.

Hastings and Wells admitted that the company, founded in 1997, had "hurt its hard-earned reputation" and stalled its domestic growth with the pricing change, and, to a lesser degree, the proposed Qwikster rebranding.

"The last few months have been difficult for shareholders, employees, and most unfortunately, many members of Netflix," they said. "But our long-term streaming opportunity is as compelling as ever and we are moving forward as quickly as we can to repair our reputation and return to growth."

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