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  1. KAPS's Avatar
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       #1  
    I don't know but this acquisition may well work for Microsoft and they will have a serious competition to Apple iCloud.

    Should Microsoft Buy Netflix? (AAPL, MSFT, NFLX, NOK, RIMM, YHOO)

    Should Microsoft Buy Netflix?

    An unlikely marriage is being pitched again. Fortune contributor Kevin Kelleher is suggesting that Microsoft (Nasdaq: MSFT ) should acquire Netflix (Nasdaq: NFLX ) .

    We've heard this before. Ever since Netflix CEO Reed Hastings was brought on to the Microsoft board four years ago, analysts and shareholders have been suggesting that the two names should get together. I was one of the early cupids trying to give the companies a nudge four summers ago.

    A lot has happened since then. But even though Netflix is a lot more expensive these days, the pairing makes even more sense now.

    On bended knee
    Kelleher's thesis reflects recent developments. Remember Monday's iCloud announcement from Apple (Nasdaq: AAPL ) ? Did you catch the suggestion two weeks ago from Greenlight Capital's David Einhorn that it's time for Steve Ballmer to step down?

    Well, Kelleher sees acquiring Netflix as a two-fer. On one hand, it would give Microsoft some serious ammo -- and consumer street cred -- to take on iCloud's master plan for the Apple-i-zation of the masses. Kelleher also sees the visionary Hastings as an ideal co-CEO alongside Ballmer.

    But we can't just join the two interlocking puzzle pieces together.

    For starters, Netflix won't come cheap. Unlike many of the tech stocks that have been correcting sharply in recent weeks, Netflix hit an all-time high on Monday. It's is packing a market cap of $14 billion, and there's no reason for shareholders to punch out unless it's at a healthy premium. The company has also been an aggressive buyer of its own stock. There are now nearly 11% fewer shares outstanding than there were two years ago.

    The accolades for Netflix, meanwhile, keep coming. Citi's Mark Mahaney upgraded the stock last month, raising his price target from $245 to $300. Caris & Co.'s David Miller reiterated his bullish rating on the stock -- and his juicy $316 price target -- yesterday.

    Unless Hastings thinks Netflix is somehow peaking, he's unlikely to cash out for anything less than $20 billion. Shareholders may not play along unless they get half of the nearly $50 billion on Microsoft's balance sheet.

    Making dollars and sense
    Microsoft's name is an easy one to toss into the rumor mill. The company is cash-rich, far-reaching, and hungry for growth. There aren't too many companies that would be willing to offer $8.5 billion for Skype, the way Mr. Softy recently did. It was open to paying $6.6 billion for aQuantive four years ago. And it was willing to pay even more than that in its failed bid to acquire Yahoo! (Nasdaq: YHOO ) a year later.

    Rumors have recently tied Microsoft to the purchase of Nokia (NYSE: NOK ) or Research In Motion (Nasdaq: RIMM ) , but the last thing Microsoft needs is a fading giant. I realize that pet owners often have pets that resemble them, but this is ridiculous. Microsoft needs an acquisition that would shake things up and make Mr. Softy a growth stock again.

    Netflix may be too small to materially affect the income statement in the near term, but right away one would see an expansion of valuation multiples for Microsoft solely because of Netflix's open-ended upside.

    The waiting is the hardest part
    When I suggested a Micro-flix hookup four years, it would have been easy. Netflix had 7 million subscribers and commanded a market cap of $1 billion. Now we're looking at a $14 billion company with 23.6 million global subscribers.

    Netflix would boost Microsoft's profile in mobile operating systems, consumer entertainment, and the streaming of movies on video-game consoles. The company that flopped with the Kin and Zune would be a winner again in consumers' eyes.

    Given Netflix's rich valuation, Microsoft may decide to wait for a pullback, but it would have snapped up Nokia or RIM if all it wanted was a discount.

    "Buying Netflix and installing Hastings as co-CEO would position Microsoft to return to the center of the tech industry," Kelleher concludes.

    He's right, but if Microsoft always did the right thing, it wouldn't be in this predicament, now, would it?
  2. #2  
    I really don't want to see us end up with a few corporations owning everything and that looks like where we're headed. That equals less competition.
    HP has officially ruined it's own platform and kicked webOS loyalists and early TouchPad adopters to the curb. You think after you drop it like a hot potato and mention it made no money and is costing you money, anyone else wants it??? Way to go HP!!

    And some people are fools to keep believing their hype. HP has shown they will throw webOS under the bus and people are still having faith in them??? News flash: if it's own company won't stand behind it, it's finished!
  3. #3  
    Quote Originally Posted by The Phone Diva View Post
    I really don't want to see us end up with a few corporations owning everything and that looks like where we're headed. That equals less competition.
    Hey TPD,
    -a few corporations already own most of a lot of things, if not everything. Here are a few examples where only one company makes billions on their respective domination: microsoft owns business applications (even on macOS: imagine what would happen to apple if microsoft stopped writing Office for macOS; apple owns gadgetland; google owns online advertising; and comcast owns cable.

    As for netflix, their customer list and brand are valuable; but, as movie rental quickly moves from mail-order to streaming, Amazon and other "cloud" billionaires are likely to take larger market share -especially of new and larger markets. If you consider business fit narrowly, Amazon is the more likely buyer.

    Cheers!
    You may be right; I may be crazy. But, the Treo may be just the device I've been looking for.
  4. #4  
    MSFT already bought up Skype. That was a surprise. What for? I'm just waiting for them to morph it into something they control and profit from. Or shut it down and take the technology. Wasn't there a report of them already killing off an open source agreement?
    HP has officially ruined it's own platform and kicked webOS loyalists and early TouchPad adopters to the curb. You think after you drop it like a hot potato and mention it made no money and is costing you money, anyone else wants it??? Way to go HP!!

    And some people are fools to keep believing their hype. HP has shown they will throw webOS under the bus and people are still having faith in them??? News flash: if it's own company won't stand behind it, it's finished!
  5. #5  
    Quote Originally Posted by The Phone Diva View Post
    MSFT already bought up Skype. That was a surprise. What for? I'm just waiting for them to morph it into something they control and profit from. Or shut it down and take the technology. Wasn't there a report of them already killing off an open source agreement?
    I don't think that had anything to do with Microsoft's acquisition. The way it sounded that might have been in the works well before the acquisition.
  6. RafRol's Avatar
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    #6  
    Quote Originally Posted by The Phone Diva View Post
    MSFT already bought up Skype. That was a surprise. What for? I'm just waiting for them to morph it into something they control and profit from. Or shut it down and take the technology. Wasn't there a report of them already killing off an open source agreement?
    I can easily see MS integrate Skype into Xbox Live. Imagine Skype on an Xbox360 with Kinect. That would actually be pretty cool.

    Then of course, there's the possibility of integrating Skype with Windows Live Messenger, or even replacing it...
    Visor/Sprint Springboard Expansion Module > Visor Platinum > Tungsten E > Centro (work) > Palm Pre
  7. #7  
    Streaming is going to have to improve dramatically before I'll give a rip about it. The picture quality is poor at best when viewed on a 55" screen.
    If "If's" and "But's" were candy and nuts we'd all have a Merry Christmas!


  8. #8  
    HD streaming at a time when ISPs are going with stupid bandwidth caps and telling providers like Netflix to pay more for access, may be impractical for now.
    HP has officially ruined it's own platform and kicked webOS loyalists and early TouchPad adopters to the curb. You think after you drop it like a hot potato and mention it made no money and is costing you money, anyone else wants it??? Way to go HP!!

    And some people are fools to keep believing their hype. HP has shown they will throw webOS under the bus and people are still having faith in them??? News flash: if it's own company won't stand behind it, it's finished!
  9. #9  
    MSFT needs netflix like they needed to spend a gazillion dollars for skype and gazillions to deal with Nokia and yahoo, etc...

    what they really need to acquire a new CEO.
  10. #10  
    I agree Ballmer has not been the best for MSFT. Firing the guys who actually innovated from the old business models that weren't working in today's world(Allard and his team), was a smart idea(sarcasm). Laughing off the iPhone but at the time still had a entertainment unfriendly and non-consumer oriented OS, hence bad foresight for a CEO. Wasting astronomical money on Danger and the Kin, because he allowed Lees to kill the Kin after spending all that money. However, WP7 is a better idea because smartphones are now hot, so why did they even bother in the first place buying Danger for the Kin? Or why not make the Kin a smartphone for younger people with light WP7, but not the way they did it at the time.
    HP has officially ruined it's own platform and kicked webOS loyalists and early TouchPad adopters to the curb. You think after you drop it like a hot potato and mention it made no money and is costing you money, anyone else wants it??? Way to go HP!!

    And some people are fools to keep believing their hype. HP has shown they will throw webOS under the bus and people are still having faith in them??? News flash: if it's own company won't stand behind it, it's finished!

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