Netflix shares up on Microsoft buyout rumor

By on October 29, 2012, 7:30 AM

Share value in Netflix rose more than 13 percent on Friday following a rumor that Microsoft was interested in purchasing the streaming video and DVD-by-mail outfit. Netflix will open on Monday at $69.58 per share, a much-needed boost considering it has been trading at almost half of its previous year high in recent weeks.

Forbes believes the latest rumor stems from the fact that Netflix CEO Reed Hastings recently stepped away from his position on Microsoft’s board of directors. If Microsoft is indeed thinking of making a bid, it’s quickly evident how having Hastings on the board would complicate matters.

Of course, that’s pure speculation at this point as there could be a number of other reasons why Hastings stepped down from Redmond’s board. For one, he’s an extremely busy man. In addition to his duties as Netflix CEO, he also serves on the board of directors at Facebook. Maybe he just wants a little extra free time.

It’s also entirely plausible that Netflix is feeling competitive pressure from Xbox Live. Microsoft has been making serious strides to transform the console from a pure gaming system into a digital hub for all things entertainment.

There appears to be no better time than the present for Microsoft to make a bid, even considering the 13 percent share value increase. Save for a brief stint in July, Netflix stock value has seen a steady decline since reaching a one-year high of nearly $130 back in early February. Even that figure is significantly less than what it was trading at during its heyday in July 2010 where the stock nearly hit $300.




User Comments: 17

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1 person liked this | ReederOnTheRun ReederOnTheRun said:

Great, maybe Microsoft will get more movies and tv shows on netflix instant sooner since netflix instant is already used on the xbox so much (from my limited perspective at least). I just really hope they don't try to integrate it so much that I need an xbox to use netflix. That'd be an Apple move.

Guest said:

Argh, more likely they will ruin another perfectly good company. :(

jobeard jobeard, TS Ambassador, said:

Argh, more likely they will ruin another perfectly good company.

Sadly I agree Been a DVD customer for years and lately with a new HDTV, I now stream a ton of movies.

Not looking forward to MS control of a fine consumer service.

Guest said:

Just keep netflix like it is M$. If not, you'll see those shares go right back down again... but even worse. I can see it now. $15 for all seasons of 1 tv series. $2 per movie. We might get newer releases, but of course that would mean even higher prices for those. Wouldn't surprise me at all.

jobeard jobeard, TS Ambassador, said:

The stock price of any target buyout company ALWAYS rises on the rumor of any acquisition - - that's free enterprise and stock market mechanics and has nothing to do with the value of either company. Another form of speculation.

Divvet said:

If MS buy, say goodbye to any chance of Linux support

ReederOnTheRun ReederOnTheRun said:

If MS buy, say goodbye to any chance of Linux support

I think it'd still be okay, it plays in the browser anyways

Guest said:

It kind of makes sense. Netflix uses Silverlight, Mircosoft's poor application framework, and is in fact one of the few websites to utilize that framework. Silverlight is not available on Linux, and there doesn't appear to be any projects working on making it available since Moonlight is dead. Unless Netflix completely rewrote their entire website and back-end to use HTML5, I doubt we'll ever see it on Linux regardless of a Microsoft buy or not.

treeski treeski said:

It kind of makes sense. Netflix uses Silverlight, Mircosoft's poor application framework, and is in fact one of the few websites to utilize that framework. Silverlight is not available on Linux, and there doesn't appear to be any projects working on making it available since Moonlight is dead. Unless Netflix completely rewrote their entire website and back-end to use HTML5, I doubt we'll ever see it on Linux regardless of a Microsoft buy or not.

Considering Silverlight is effectively a DEAD framework, it is very likely that Netflix will begin rewriting the site mechanics.

Guest said:

A rewrite would be a very welcome change.

9Nails, TechSpot Paladin, said:

Netflix works fine for me. But I watch it at home on my PS3, mostly since it's quieter than the Xbox 360, and runs smoother than my internet enabled BR DVD player.

I would like to see more content. They need to get Big Bang Theory on streaming!

howzz1854 said:

Normally I would view Microsoft's purchase of many things as a negative impact on competition, but in this case, I would have to agree with the potential buyout. Netflix needs a strong arm for its rights/licensing dept. very few players in the industry can pull that off, microsoft is one of them. acquiring netflix will also allow MS to integrate online streaming as a native feature with Media Center. you go MS.

stbecker said:

Meh, there is already a Netflix plugin for WMC. Whoopdy-do, I have a Netflix client in my TV already.

I tend to view MS with cautious optimism. The fact that Win 7 has WMC built-in with, quite frankly, excellent features speaks of what that company can accomplish. On that same theme, however, it's frustrating to see that WMC records in a WTV container. I get it, WTV is MPEG-2, which most a ton of devices support, but most don't know what WTV is. That speaks of how MS can neuter a potentially killer product.

As for the licensing support, I would imagine there could be pros/cons. Yes, there would be a financial bonus with M$ having the purchasing power to basically do what they want. But it might not be all about the money. Hulu is a collaboration between groups and even they can't get what they want in terms of content either. Some content is just flat out (as of yet) impossible to get licensing for. I think it is (or was) CBS that basically had a crap-shoot for what shows they allowed streaming. It is getting better, but you get the point.

veLa veLa said:

Good news. I already pay for Netflix so I can watch stuff on the living room Xbox. I don't care about the DVD aspect, although the streaming part has improved lately.

Wagan8r Wagan8r said:

I think this would be a GREAT move. Just think of all of the content deals that they could ink with the financial power of Microsoft! Of course, it would probably replace the 'Netflix' name to 'XBOX Movies' or something like that.

tipstir tipstir, TS Ambassador, said:

I hope this is not so! I've been using the service for 2 years now. along with Amazon Prime Instant Videos and HuluPlus and some Vudu offers deals. I always like the way Netflix operates. Now they charge more than $7.99 like $8.34 tax included. The others are not so flexible like Netflix.

Blkfx1 Blkfx1 said:

I am interested to see how it plays out. That is... if it actually happens.

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