That return to customer growth reassured Wall Street that the video rental company, which outraged customers with a surprise price hike and a botched attempt to split off its DVD-mail service in 2011, was holding its own despite stiffening competition.

CEO Reed Hastings, who grew the company into a major disruptive force within the traditional media industry, shrugged off competition from Amazon.com Inc and Hulu Plus in a letter to shareholders on Wednesday, saying both services offered far less content.

Hastings said he expected Amazon.com to establish a separate paid-streaming service similar to Netflix's, but cheaper. Still, he stressed that Amazon now had less than 10 percent of Netflix's total viewing hours.

The company's most formidable competition would be cable networks going mobile, or so-called "TV Everywhere," he said.

"Every major network is investing in their Internet application, on tablets, smart TVs, phones, game consoles, and laptops," Hastings said.

Netflix added 610,000 net new subscribers in its home U.S. market, helping revenue leap 47 percent to $876 million. That outpaced an average forecast for $857.9 million, according to Thomson Reuters I/B/E/S. U.S. subscribers at the end of December stood at 24.4 million and international customers at nearly 1.9 million.

U.S. streaming subscribers were higher than expected and a projected first-quarter net loss amid an international expansion was smaller than many feared, analysts said.

"That's going to be comforting to people," said B. Riley & Co analyst Eric Wold.

Netflix forecast a first-quarter 2012 loss of $9 million to $27 million. The company has not predicted when it will turn a profit again. "We're focused on returning to global profitability as soon as possible," Hastings said in an interview.

STEM THE BLEEDING

Shares rose 13 percent to trade above $107 in after-hours trading following the earnings report on Wednesday. They had ended at $95.04, up 2.6 percent, in the regular session on Nasdaq.

Earnings per share hit 73 cents, beating an average forecast of 55 cents.

Netflix shed more than 800,000 U.S. customers in the third quarter of 2011 after an uproar over a price hike and now-aborted plan to rent DVDs under the name Qwikster. The company's share price plummeted from $304 in July to $62 in November.

In the letter to shareholders, Hastings - a Wall Street darling until last year's slip-ups - stuck to previous forecasts of bumping up margins by about 1 percentage point every quarter as the company shifts customers from its DVD-by-mail service onto instant streaming.

To sustain that momentum, Netflix has been writing ever-heftier checks to acquire more TV shows and movies for its streaming service. On Wednesday, Hastings predicted that while content acquisition costs will continue to increase quarter by quarter, that pace of growth will begin decelerating in 2012.

Longer-term, Netflix still faces a deluge of competition, a tarnished brand, and a costly expansion that will erode bottom lines, at least in the short term.

"They have kind of righted the ship in the near term," Morningstar analyst Michael Corty said. "The question investors need to ask is how are they really going to grow this domestic business, not just this quarter but over the next several years."

In the interview with Reuters, Hastings said he was "very confident in our ability to acquire content, and to continue to create a better and better service."

(Reporting by Lisa Richwine; Editing by Gary Hill)

• A Permanent Economic Emergency