Netflix Spikes on Reignited Takeover Talk (
May 12, 2010 2:47 PM
NEW YORK (TheStreet) -- Netflix (NASDAQ: NFLX) is spiking as rumors surface yet again that Amazon (NASDAQ: AMZN) is interested in acquiring the company.
These rumors have surfaced many times over the last several years in regards to Netflix, most recently in January. Each time analysts have dismissed the claims.
While anything is possible (note the Hewlett-Packard (NYSE: HPQ)-Palm (NASDAQ: PALM) deal), Needham analyst Charles Wolf says it is unlikely.
"Amazon would not acquire Netflix for its by-mail business, which will eventually go away" he says. While Netflix has a terrific digital-streaming business, its library consists of mostly older films. It can't offer new releases as they are available because it is too expensive.
Amazon, itself, has a streaming pay-per-view service for new releases, and it doesn't seem like there is a barrier preventing Amazon from offer old movies, Wolf says. "So the company has little reason to buy Netflix."
Still, Netflix has been a successful growth story, adding 1.7 million subscribers during the first quarter, its biggest gain in its 11-year history.
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