Is Netflix an Acquisition Target?
Netflix: Starring in Merger Story? “So, is Netflix really takeover bait? At some point, and some price, the answer is probably yes. Analysts are split on whether $42 a share, which represents nearly a 50% premium over today’s stock price, is too much to pay. Through the first nine months of this year, Netflix posted $492 million in revenue, but made just $3.8 million in net income, as it fought off Blockbuster’s marketing barrage. For next year, Netflix is promising only “at least $60 million” in pretax income.”
“That’s why a Netflix takeover may still be down the road a piece — and the buyer is likely to be a cable operator, a telecom pushing into movie delivery, or even a Web media player such as Yahoo! (YHOO). Today, Netflix delivers its DVDs by mail, shipping them from a network of distribution centers in the U.S. The long-term threat to Netflix is that a company like Comcast (CMCSA) or SBC Communications (SBC) could gradually take over the movie-rental market by delivering content digitally to TVs, either via a computer link or a set-top box.”