The Stalwart submits: Several months ago we speculated that Netflix (NFLX) might be on the block and that Amazon (AMZN) would be a logical partner. There haven't been many developments on that front since then, but now the rumors are starting again, and getting picked up in the press.
This is from BusinessWeek:
But Netflix's stock surge may also relate to the plans of a much-feared potential competitor: Amazon.com. Banking sources credit much of the move to rumors that Amazon had made a private, $42-a-share bid for Netflix in the past two weeks. Both companies declined to comment. Several Netflix directors privately cast doubt on the talk, however, saying it's only the latest of many rumors that have surrounded their company.
Last year, Netflix had said it expected Amazon to enter the U.S. video-rental market after testing the concept in Britain and Germany. Yet, with Amazon's British service trailing in market share in that country, Netflix now thinks Amazon will stay out of its business.
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.
The article also gives reasons why Netflix might be a better fit with with a telecom or cable company, and not Amazon.
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