As Netflix shares zoom, is Microsoft thinking of making a takeover bid?
Could Microsoft be thinking about buying Netflix? Shares in the world's biggest streaming video service service were well up yesterday on rumours that such a deal might be in the works. The price went up $5.68, or 9.2%, to $67.19.
Netflix: A Microsoft deal?
The rumour goes right back to Netflix CEO Reed Hastings deciding recently to step down from Microsoft‘s board of directors.
Forbes magazine writer Eric Savitz said then one potential reason for that move could be that Microsoft was thinking about buying Netflix. "If so, they certainly couldn’t have Reed hanging around the Microsoft board room trying to figure out how much to bid."
Netflix shares are at roughly half of their 52-week high. The company still has an iconic brand in streaming video and widespread distribution "on almost every conceivable computer and consumer electronics platform," Savitz says.
Netflix has a market cap of just $3.7 billion. Microsoft has almost $69 billion in cash and investments.
Savitz believes buying Netflix would be in keeping with Microsoft’s revamped philosophy on the Xbox 360, which treats the device more like an entertainment device and less like a video game console.
Microsoft paid $8.5 billion for Skype, he says.
One scenario, he puts forward: What if Microsoft bought Netflix for, say, $5 billion, and then stopped supporting the service on iPads, but offered it at a discount for users of Microsoft Surface tablet users?
Savitz says there are lots of reasons to think that a deal makes sense. "But whether there’s anything more here than idle speculation…I have no idea."