Microsoft (NASDAQ:MSFT) just tipped its hand about how it views the future of video downloads by appointing Netflix (NASDAQ:NFLX) Chief Executive Reed Hastings to not only the board but also to the all important finance committee of Microsoft.
Usually you just buy out the new technology, make some guys rich and then swallow it like a between-meal snack. Microsoft values this individual to the point where it has put him on the board and has put his hands on the steering wheel. But so far they are not complimenting the investors.
The shareholders of Netflix who believed and invested in the vision of Reed Hastings will not benefit. Netflix has been the beta test site for Reed Hastings ideas. If you bought the stock in 2002, you made some money but not the type of return that disruptive technologies provide when successful.
Insider trading reports indicate some recent significant selling on the part of Reed Hastings. There is a signal here. The long-term case for Netflix with a $1.6 billion market cap may not be as strong as you would want from an investment.
Watch for other key personnel to graduate to other situations.
NFLX vs. MSFT 1-yr chart