Last week’s answer

Born in 1927 and based in New York, I’m in the media business, concentrating on technology and games. I reach more than 17 million readers per month, through offerings such as PC Magazine, eWEEK, Baseline, CIO Insight, Electronic Gaming Monthly, Official U.S. PlayStation Magazine, Computer Gaming World, GameNow, Xbox Nation and GMR. (I once published Car & Driver, Yachting, Popular Photography, Stereo Review and Modern Bride.) There are 39 foreign editions of my publications distributed in some 64 countries. I also operate Web sites such as ExtremeTech.com, offer industry analysis, and run online seminars and conferences. Who am I? (Answer: Ziff Davis)

That’s an order

If you do any buying and selling of stocks, make sure you understand the kinds of stock orders you can place. Here are some key terms to know:

• Market order: This is the most common type of order, for immediate execution at the best price available. It’s nearly always filled, since no price is specified.
• Limit order: This is an order to buy or sell only at a specified price (the limit) or better. Use this if you have a maximum or minimum price at which you’re willing to trade. (If the price isn’t reached, the order isn’t filled.)
• Fill-or-kill: This order is sent to the floor and is canceled if it cannot be filled immediately.
• Day order: This order terminates automatically at the end of the business day if it hasn’t been filled.
• GTC (good ’til canceled): This order remains in effect until canceled by the customer or executed by the broker. Many brokerages cancel GTC orders after a month or two if they’re still not filled.
• All or none (AON): This is a limit order in which the broker is directed to attempt to fill the entire amount of the order or none of it. Immediate execution is not required.
• Stop order: This becomes a market order when a specified price is reached or passed. Buy stops are entered above the current market price; sell stops are entered below it. For example, you might place a stop order to have your shares of XYZ automatically sold if it falls below $40 per share. A stop order guarantees execution but not price.
• Stop limit order: This is similar to a stop order, but it becomes a limit order instead of a market order when the price is reached or passed. When you place a “sell 100 XYZ $55 stop limit” order, if XYZ drops to $55 per share or below, the order becomes a limit order to sell 100 shares at no less than $55.

These are the major types of orders. Some can be combined. For more information on brokerages and choosing among them, visit www.brokerage .fool.com and review the benchmark scorecards at www.gomez.com.

Netflix packs them in

DVD rental service Netflix (Nasdaq: NFLX) recently reported that quarterly revenues leapt 74 percent to $63 million. It signed on 327,000 new trial subscribers, too, driving total subscribers to 1.14 million. Excluding stock-based compensation, the quarter’s $5 million in net profit topped expectations.

Whereas Netflix previously would lease up to 65 percent of its DVDs (on which it would then share any rental revenue), it has now bought up to 60 percent of all new DVDs in its inventory (entitling it to more revenue). The company paid about $30 to acquire each new subscriber, which could rise to $35 or more later this year, while the company tests new marketing concepts.

Gross profit margins have fluctuated as Netflix has grown.

Nonetheless, management increased its profit expectations for 2003 by about 20 percent, and upped the range of its revenue estimates. Competition from the likes of Wal-Mart seems to be helping Netflix: The battle is actually boosting membership as the spectacle essentially serves as free advertising.

Netflix has some aggressive long-term goals. By 2007 to 2009, the company aims to reach $1 billion in annual revenue, 5 million subscribers, and $100 million to $200 million in annual free cash flow.

That’s a long way to go, but it’s moving in the right direction.

Humble pie in the sky

I purchased $500 worth of Iridium stock in 1997 at $28 per share. I felt this was a smart buy for two reasons: The company’s satellite idea was great, and Motorola had a vested interest. I couldn’t go wrong, right? Wrong!

The satellites went up and so did my shares. What I didn’t know was that the cost of the equipment to use these satellites was about several thousand dollars per phone, which helped speed Iridium’s demise. My shares are worth about $3 today, total. I feel like I invested in a shooting star instead of satellites — now you see it, now you don’t. — G. “Skywatcher” Walls, Chicago

The Fool Responds: Many folks lost their shirts on this one, fascinated by Iridium’s promising technology, creating a global cellular network via a world-encompassing satellite system.

The company took on billions of dollars in debt putting 60-plus satellites in orbit, but a good idea doesn’t necessarily make a good investment. A lesson to learn here is to seek companies with proven track records, sustainable competitive advantages and solid growth prospects.