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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Difco who wrote (44711)	9/30/2011 10:29:47 PM
From: Mark Marcellus	Read Replies (1) \| Respond to of 78666

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.

To: Difco who wrote (44711)	10/1/2011 12:19:14 AM
From: Jurgis Bekepuris	Read Replies (3) \| Respond to of 78666

NFLX - I think you are asking me a wrong question "what do you think would be a good metric for valuation?" If you have to invent special metrics to value a company, then it's most likely you're just fooling yourself that it's cheap. Comparable takeover prices proposed by Mark Marcellus in his response is IMHO one of such metrics. Lots of people lost tons of money expecting comparable takeover pricing - including some IDCC investors very recently (I still hold some IDCC that I coulda/shoulda sold at "comparable takeover" pricing runup though I sold most of it.) If I am misinterpreting your question and you are asking "what is good price to buy NFLX", then my answer is maybe at $3B valuation, but even then I'd not be sure. As I said, part of this is unanswerable, because for NFLX to trade at $3B valuation some really bad things have to happen and these things would have to be evaluated before buying. Disclosure: I think NFLX CEO is stupid to split NFLX into two companies. My arguments were outlined here: Message 27649675 . In our household, I would cancel both NFLX subscriptions right now, but it's outside my hands ;) so I'll see what cooler head (of the household ;)) decides. :)