The current market cap for NFLX is around $6B. The DVD business can be spun off, and will still generate very nice cash flows with minimal capex for quite a while. I don't have a good handle on what the DVD business is worth, but it should be a decent percentage of that $6B market cap. Google paid $1.65B for YouTube way back when, in retrospect that price was probably cheap for what they were able to realize from the acquisition. So the big question, in my mind, is how much is NFLX worth to MSFT, GOOG, AAPL, or anyone else who is looking to offer streaming content?
I don't have a good answer to that question, but I do believe we've moved from insanely overvalued to a price where this company starts to become attractive as an acquisition target.
Also, FWIW, there are no recent subscriber losses, there are projected subscriber losses based on the change in pricing. The price increases will offset decreases in subscribers, and a scenario where revenues increase despite the losses is far from unlikely. |
