Netflix Inc.'s second-quarter profit crept up 4 percent, beating analyst expectations as the online DVD rental leader signed up 168,000 new customers while spending less money to attract them to the service.

The Los Gatos, Calif.-based company said Friday that it earned $26.6 million, or 42 cents per share, from April through June, up from $25.6 million, or 37 cents per share, in the same period a year ago.

The average earnings estimate among analysts surveyed by Thomson Financial was 40 cents per share.

Revenue climbed 11 percent to $337.6 million to match analyst estimates.

Netflix shares gained $1.12, 4.2 percent, to close at $27.85 Friday.

The company ended June with 8.4 million subscribers, and probably would have had even more if it had advertised its service as vigorously as it usually does.

But management has decided to sacrifice some of its growth opportunities to ensure it keeps Wall Street happy with higher profits, Netflix Chief Executive Reed Hastings said during a Friday conference call.

As a result, Netflix trimmed its marketing expenses by $5 million, or 11 percent, from the same time last year.

Despite the cutback and a slowing economy, Netflix had far more success luring new subscribers than last year when it lost 55,000 customers during the spring - the only quarter that the company's service has shrunk during its nine-year history.

"We appear to be substantially unaffected by the negative economic climate," Hastings said.

Netflix could afford to spend less on advertising because its biggest rival, Blockbuster Inc., has been promoting its online rental service less aggressively during the past six months.

But some analysts believe that is about to change now that Blockbuster has abandoned a takeover bid for electronics retailer Circuit City Stores Inc. and is preparing to expand its Internet presence with a pay-per-view online video service acquired last year from Movielink. In a sign that it could be gearing up for more growth, Blockbuster hired a new chief marketing officer just a few weeks ago.

Hastings, though, said he doesn't expect Blockbuster to derail Netflix this year. Underscoring management's confidence, Netflix still expects to end the year with 9.1 million to 9.7 million subscribers - the same guidance issued three months ago.

The company also affirmed its previous profit projections for the year.

Holding the line on advertising costs will be important to Netflix because the company is spending more to develop a service that streams movies and TV shows over high-speed Internet connections.

Netflix still isn't charging more money for unlimited use of the streaming service, even though its costs for licensing movies are rising as the service becomes more appealing to subscribers because of a recently introduced $100 device that automatically shows the video on TV sets instead of computers.

Hastings declined to comment Friday on unconfirmed reports that nearly 100,000 of the TV streaming players made by Roku Inc. had been sold during their first two months on the market.

Microsoft Corp.'s video game console, Xbox 360, is scheduled to start streaming for Netflix this fall, a breakthrough that could increase the usage of the digital service even more dramatically.

Netflix also is facing higher costs to buy high-definition DVDs for subscribers with Blu-ray players, but the company has already decided to raise its prices for that luxury. Hastings said Netflix will begin testing different prices for Blu-ray DVDs during the current quarter.

Yahoo Inc. averted a showdown with rabble-rousing investor Carl Icahn on Monday by giving him three seats on its board of directors in a truce that still leaves the door open for a possible sale to Microsoft Corp.

Billionaire Carl Icahn may use the three board seats at Yahoo Inc. that he added to his collection on Monday to do ... not much.

Circuit City Stores Inc. plummeted to historic lows in trading Wednesday after Blockbuster Inc. withdrew its takeover bid, causing investors to question the consumer electronics retailer's future.

Wall Street resumed its sell-off Wednesday after oil hit a new record and a bearish analyst report renewed concerns that General Motors Corp. could run out of cash.

Stocks that moved substantially or traded heavily Wednesday on the New York Stock Exchange and Nasdaq Stock Market:

Stocks gave up a brief rally Wednesday and resumed the selling seen in recent weeks after factory orders showed their the weakest performance in three months in May and as energy prices rose.

Stocks fluctuated Wednesday after factory orders showed their the weakest performance in three months in May and as investors squared positions ahead of the government's June employment report.

Stocks traded mixed Wednesday after factory orders showed their the weakest performance in three months in May.

Stocks rose slightly in early trading ahead of a report on factory orders that could give another glimpse of how the economy is faring.