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Netflix shares rise on rumor of Microsoft takeover

posted by Alan F. / Oct 26, 2012, 3:48 PM

Netflix shares rise on rumor of Microsoft takeover

Netflix can be found on millions of smartphones

Shares of Netflix soared over 13% higher on Friday as speculation circled the street that Microsoft was about to make a bid for the streaming video provider. The spark for all of this goes back to Netflix CEO Reed Hastings' decision to step down from the Board of Directors of Microsoft. If Microsoft is planning a bid for Netflix, obviously the CEO of the target company can't be sitting in the boardroom of the possible acquirer and listening to secret strategic plans.

While there could be plenty of other innocent reasons for Hasting's action, the drop in Netflix shares by more than 50% since the beginning of the year has made the company a much better value for a company interested in buying it. With a market cap of $3.7 billion, Netflix is certainly affordable for Microsoft which is sitting on $66 billion in cash and equivalents as of its latest quarterly report. Even figuring a healthy premium for Netflix holders into the equation, Redmond based Microsoft could easily make this an all-cash deal.

Why would Microsoft be interested in Netflix? It could have something to do with content for the Xbox 360 as Microsoft turns the game console into a home entertainment device. It also could be a way for Microsoft to counter Google's ownership of YouTube which has become a staple on iOS and Android smartphones. The red Netflix square icon can now be found on most smartphones as well, and buying Netflix would give Microsoft an way to reach millions of smartphone screens.

source: Forbes

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19 Comments

1. sorcio46

Posts: 435; Member since: Jul 27, 2011

Microsoft no, get away from a decent service provider ! You can only ruin things !

posted on Oct 26, 2012, 3:53 PM 9

3. e.wvu unregistered

You call Netflix descent? They've been terrible lately.

posted on Oct 26, 2012, 3:58 PM 6

5. Lift_Off

Posts: 152; Member since: Apr 04, 2012

Ya what are you talking about decent? Netflix is a complete letdown now. They used to have a lot of great movies and such, but now they have only a couple good movies and TV shows. Maybe Microsoft can change it

posted on Oct 26, 2012, 4:29 PM 8

9. meowcenary

Posts: 187; Member since: Apr 13, 2012

Well it depends on how open you are and willing to explore different genres. If you are narrowly focused and only go for mainstream items, then it would suck. Personally i've always found something good/interesting to watch on netflix.

posted on Oct 26, 2012, 7:34 PM 2

6. Bilpocalypse

Posts: 301; Member since: Oct 13, 2012

They haven't destroyed Skype yet. Just saying.

posted on Oct 26, 2012, 4:51 PM 11

16. Mxyzptlk unregistered

I like this. It'd mean MS making even more money off Android from license agreements and Netflix.

posted on Oct 27, 2012, 9:54 AM 1

2. PAPINYC

Posts: 2315; Member since: Jul 30, 2011

If Microsoft gets their hands on Netflix they'll remove the "Copy & Paste" feature [again]…

posted on Oct 26, 2012, 3:57 PM 6

4. TheMan

Posts: 494; Member since: Sep 21, 2012

I'd like to sit on $66 billion in cash.

posted on Oct 26, 2012, 4:15 PM 5

10. corporateJP

Posts: 2458; Member since: Nov 28, 2009

That's not all you'd like to sit on, Karamo.

posted on Oct 26, 2012, 7:43 PM 0

7. snowgator

Posts: 3614; Member since: Jan 19, 2011

Okay, I know it is a rumor and all, but.... Holy Selling Point, Batman!! The built in entertainment value is indeed intriguing, and easily fits into the ecosystem MS is trying to build. It would be worth twice the price they are talking about to get a leg up on this content. Google has done such a great job building an entertainment and information empire. Apple is not sitting still. MS would be wise to come off some of that cash and make it happen.

posted on Oct 26, 2012, 5:15 PM 5

11. corporateJP

"Wise" is usually something Microsoft's portfolio lacks.

posted on Oct 26, 2012, 7:44 PM 0

14. Owlet

Posts: 450; Member since: Feb 21, 2011

Yeah, that's how you get to sit on 66 billion, right?

posted on Oct 27, 2012, 1:11 AM 2

17. corporateJP

No, you sit on $66 billion because you had a monopoly for the better part of twenty years and spent very little money out of the funds, but when you do, you waste a bunch on buying an overpriced marketing firm that didn't add up to it's hype and a couple of software firms that didn't do much for your core business. Do your homework before you flame, just like the other five fanboys on the thumbs-down button.

posted on Oct 27, 2012, 2:29 PM 0

18. Owlet

I see you know a lot about business (being "corporateJP" and all), and how to do it the right way, unlike MS. How many billions did that put you on? Doing it the right way? OK, I'll go do my homework, so I can start doing business the foolish way MS has been doing. Maybe I'll get my first billion ;) P.S. Not sure what fanboy or girl it makes me... Windows? Android? Netflix? Maybe even rottern fruit....

posted on Oct 27, 2012, 2:54 PM 1

8. InspectorGadget80 unregistered

If M$ purchase NETFLIX more subcribers will leave and would mess up their pricing. Just glad I left NETFLIX when they got rid of their unlimited dvd/streaming plan

posted on Oct 26, 2012, 5:17 PM 2

12. MorePhonesThanNeeded

Posts: 645; Member since: Oct 23, 2011

Not sure the point of MS buying Netflix unless they want to somehow offer it on 360..oh wait...it's already on 360, PS3 and any blasted computer you can use. Don't see the point of this unless MS want to have Netflix to itself and that would hurt them more than work for them no matter how you slice it up.

posted on Oct 26, 2012, 10:19 PM 1

13. lubba

Posts: 1313; Member since: Jan 17, 2011

Netflix is s**tty. Old movies!

posted on Oct 26, 2012, 11:10 PM 1

15. speckledapple

Posts: 902; Member since: Sep 29, 2011

Netflix has its flaws but it is at least a respectable offering. I think Microsoft would be foolhardy to do that now. However, that does not mean they are not ripe for a takeover in the future. Time will only tell how their content library continues.

posted on Oct 27, 2012, 2:23 AM 2

19. downphoenix

Posts: 3165; Member since: Jun 19, 2010

If Microsoft buys out Netflix, Im okay with that, UNLESS they disable netflix support on PS3. If they do that, then I will still be okay with if they allow Netflix on my 360 without having to subscribe to Gold. If they do neither, then bye bye Netflix subscription!