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Good article on NFLX


Eric50

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I agree with Liberty, I don't like the name Quikster.com, it sounds like a reincarnation of Amway.

 

I agree as well. They couldn't have chosen a worse name.  Some of my random thoughts are that 1) They don't want "Net" or "flix" in the name, because they wish to sell it off to raise money to acquire streaming rights.  2) They don't want "flix" in the name because they are adding games.  3) They probably want to sell it off in the near future before the game rentals bring down the margins too far. 

 

But still Qwikster is horrible.  I'm not good with names and I think even I could come up with something better than that.  How about MediaByMail or MediaRoo (have a kangaroo with disks sticking out of its pouch on the envelopes).  Anything would be better than Qwickster.

 

--Eric

 

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I agree with Liberty, I don't like the name Quikster.com, it sounds like a reincarnation of Amway.

 

I agree as well. They couldn't have chosen a worse name.  Some of my random thoughts are that 1) They don't want "Net" or "flix" in the name, because they wish to sell it off to raise money to acquire streaming rights.  2) They don't want "flix" in the name because they are adding games.  3) They probably want to sell it off in the near future before the game rentals bring down the margins too far. 

 

But still Qwikster is horrible.  I'm not good with names and I think even I could come up with something better than that.  How about MediaByMail or MediaRoo (have a kangaroo with disks sticking out of its pouch on the envelopes).  Anything would be better than Qwickster.

 

--Eric

 

It is likely that they want to keep the companies as far apart as possible to keep one business from affecting the other.. Branding them differently would be a first step.

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More speculation on why the split is happening.

 

<quote>

Pachter argues that the streaming service would be highly valuable to Amazon and a good complement to its existing Amazon Prime service. However, buying the DVD-by-mail portion would present a problem, because it has many warehouses around the country that send out DVDs. Amazon doesn't want to have a substantial business presence in more states, because it then has to collect sales tax on sales to those states

</quote>

 

http://finance.yahoo.com/news/Analyst-Netflix-split-is-apf-2067704636.html?x=0&.v=1

 

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Netflix Co-Founder, Marc Randolph, blogs about the Netflix/Qwikster split.

 

Did Netflix screw up? I don’t think so.

 

"Wall Street didn’t approve of the move either, and the stock is now trading at less than half the price it was two months ago. Even my own friends are sending me puzzled notes, wondering if the “wheels are coming off the cart”. What can I say?  They are all wrong....

 

"But what is truly mindblowing, is that when I was CEO trying to screw up my nerve to walk away from selling DVDs, I risked alienating tens of thousands of  customers.  Reed is showing that he has courage and conviction to do the right thing despite having tens of millions of them. This is why this guy is the best entrepreneur on the planet."

 

 

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Hester wrote on Sept 19

 

Interesting thread.

 

Costs (customer and content) are rising rapidly, customers are starting to leave, the business model is looking broken and is undergoing a makeover, the CEO is inexperienced and has handled the price increase horribly, analysts targets are still too optimistic, the content providers are realizing they deserve some of Netflix's profits... And yet even after the 50% fall this stock is selling at an extremely rich valuation and is pricing in aggressive growth.

 

The transition from a shareholder base full of momentum/growth investors to a base full of value investors will be VERY painful for the stock. I'm short.

 

As of Sept 19 at the latest...

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This has been the perfect broken momentum stock to short.

 

Out of curiosity, are you saying that you have shorted it? And if so, from what price?

 

Yes I shorted at roughly $150 per share, mid September.

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Regarding the change of heart:

 

http://mediadecoder.blogs.nytimes.com/2011/10/10/netflix-abandons-plan-to-rent-dvds-on-qwikster/

 

The company admitted that it had moved too fast when it tried to spin-off the old-fashioned DVD service into a new company called Qwikster.

 

“We underestimated the appeal of the single Web site and a single service,” Steve Swasey, a Netflix spokesman, said in a telephone interview. He quickly added: “We greatly underestimated it.”

 

WTF is going on there?  Did they really give the split so little thought that they'd overlook the value to their customers of having one site with one account?  Really?

 

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Here's a different take on the Netflix change..basically that NFLX separated the businesses because they were in talks with Amazon to sell the streaming business, but Amazon backed out so they're nixing the change: http://blogs.wsj.com/marketbeat/2011/10/10/netflix-no-more-outperform-for-you-says-wedbush/?mod=yahoo_hs

 

I disagree with their theory.    I think they were in talks with someone to sell the DVD business.  When the market cap was twice+ what it is now selling off the DVD business made all kinds of sense.  They could get a lot for it, they could use the cash to buy streaming rights for the streaming business.  Now that the stock is so low, you could buy all of Netflix for a lot less than they probably expected to get for just the DVD business earlier in the year, it just doesn't make sense any more to sell it.  If it was the streaming business they were planning on selling they would have changed the name of the streaming business (to streeemster or something equally ridiculous I'm sure) not the DVD business.  Its all moot now anyway. 

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Here's a different take on the Netflix change..basically that NFLX separated the businesses because they were in talks with Amazon to sell the streaming business, but Amazon backed out so they're nixing the change: http://blogs.wsj.com/marketbeat/2011/10/10/netflix-no-more-outperform-for-you-says-wedbush/?mod=yahoo_hs

 

I disagree with their theory.    I think they were in talks with someone to sell the DVD business.  When the market cap was twice+ what it is now selling off the DVD business made all kinds of sense.  They could get a lot for it, they could use the cash to buy streaming rights for the streaming business.  Now that the stock is so low, you could buy all of Netflix for a lot less than they probably expected to get for just the DVD business earlier in the year, it just doesn't make sense any more to sell it.  If it was the streaming business they were planning on selling they would have changed the name of the streaming business (to streeemster or something equally ridiculous I'm sure) not the DVD business.  Its all moot now anyway.

 

I agree the theory is dumb.  Further, they could have announced the name changes simultaneously with a definitive agreement to sell one or the other, if that's what they wanted to do.  They didn't need to first split the business then sell it.  Regardless, the business should never have been split in the first place!!!

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(Ok this news is a little old)

 

http://www.nypost.com/p/news/business/netflix_in_deal_with_cw_1ghIq4xycuAjgGQp6GYqmL

 

Netflix strikes deal for the rights to some shows on the CW network for a few years.

 

Only cost a billion dollars.

 

If they keep acquiring content at these costs they will have to dilute, certainly at higher prices than they bought back.

Hastings keeps making all the right moves.

 

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  • 2 weeks later...

Down over 20% after hours, approaching $90. Another bad quarter for subscriber losses.

 

Stock is still priced for modest growth but is losing subscribers. Stay short everybody  ;)

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