Rumors are building that Microsoft is preparing to make a bid for Netflix. Rumors that have helped the Netflix stock price jump considerably. But does the unsubstantiated rumor make any sense, or is it just a shot in the dark?
Microsoft Buying Netflix?
The rumors that Microsoft was preparing to buy Netflix reportedly spread like wildfire around Wall Street last week, with the tipping point likely to have been Netflix CEO Reed Hastings stepping down from the Microsoft board of directors. An incoming acquisition bid could be the reason for this move, but there are many other possible reasons too, including the fact that Hastings is too busy to fulfill his role.
CNET is reporting that the rumors claimed Microsoft is willing to pay $90-per-share to get Netflix. Which seems reasonable, especially as the company is now on the rise again after its troubles of 2011. The rumors meant that Netflix stock rose by over 10 percent on Friday (Oct. 26).
It All Makes Sense
Does a Microsoft acquisition of Netflix make sense? Yes, very much so. Assuming Netflix is going to continue climbing once more Microsoft could nab itself a bargain, and it has plenty of cash in hand it could use for acquisitions.
Netflix would be a good scalp to capture as Microsoft seeks to expand out from being all about Windows into a company with much wider interests. Netflix would immediately fit into the Xbox strategy, and also give Microsoft a presence on that huge range of home and mobile devices Netflix is already an integral part of.
Conclusions
So, it makes perfect sense, but it remains just a rumor for the time being. This could be nothing more than a play to raise the Netflix stock price, but it’s a gamble as if Microsoft doesn’t then come a-knockin’ the price could fall harder than ever.
Via Hot Hardware
