Netflix Sells Shares to Raise $400M, Admits 2012 Will Be Financial Bust

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Brian Snyder / REUTERS

And the crazy rollercoaster ride that is Netflix’s fortunes continues: The company announced yesterday that it has agreed to sell around $200 million in shares plus an additional $200 million in convertible bonds via private placement in an attempt to raise cash, while simultaneously revealing that it expects to spend the entirety of the next year in the red.

The two pieces of news are viewed as a bad sign for the company’s long-term financial status, despite a spokesman for the company telling reporters that there were no current plans to spend the money raised. According to David Wells, the company’s Chief Financial Officer, the capital raised has “strengthened our balance sheet,” allowing the company to “remain focused on growing our streaming subscriptions and returning to global profitability after our launch of the U.K. [service] in 2012.”

(MORE: Don’t Call It a Comeback: What Netflix Did Next)

Adding to concerns about Netflix’s stability is the company’s decision to move all of its remaining billing and payment systems over to Amazon Web Services. Netflix moved a large part of its operations to AWS in 2008, but as part of its SEC filing released yesterday, revealed the true extent to which it was relying on a company that, because of Amazon’s Instant Video offering, is pretty much a competitor: “With the fact that we cannot easily switch our AWS operations to another cloud provider,” the company explained, “any disruption of or interference with our use of AWS would impact our operations and our business would be adversely impacted.”

As to whether Amazon’s in fact a competitor, the filing implies all’s fair in love, war and business: “While the retail side of Amazon may compete with us, we do not believe that Amazon will use the AWS operation in such a manner as to gain competitive advantage against our service.”

You hear that, Amazon? They’re almost daring you to do something unexpected!

MORE: Cheat Sheet: How Bad Are Things for Netflix?

Graeme McMillan is a reporter at TIME. Find him on Twitter at @Graemem or on Facebook at Facebook/Graeme.McMillan. You can also continue the discussion on TIME’s Facebook page and on Twitter at @TIME.

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