Netflix and Amazon May Become a Joint Venture
Netflix and Amazon May Become a Joint Venture
Posted 07/14/2009 at 5:59am
| by Paul Lilly
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If you can't beat 'em, buy 'em, and most would agree that Netflix has grown too large (and too strategic) to beat. So who wants to buy them? If you believe the latest rumor, Amazon wants to buy the online DVD rental service, news of which has sent Netflix stock soaring to the highest it's been in 11 weeks.
"There's heavy call buying and the stock is up on renewed takeover talk, with Amazon being mentioned specifically," said Fred Ruffy, the senior options strategist at WhatsTrading.com. "It's pretty typical of speculative buying."
While Netflix and Amazon both compete in the Internet video business, not everyone is convinced a takeover makes much sense. Michael Pachter, an analyst for Wedbush Morgan Securities, points out that Amazon has distribution centers all across the U.S., meaning the company would have to collect sales tax in those states. Should that happen, subscribers would likely end up footing the bill.
As expected, both Amazon and Netflix said they don't comment on rumors or speculation.
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Burninator
July 15, 2009 at 6:45pm
Why is maybe not the right question, but it would seem to sum it up. Unless Netflix is in some sort of financial problem, selling themselves to Amazon or anyone else would seem to be motivated entirely by greed and won't benifit consumers in any way.
Amazon does what Amazon does and they do it well. Netflix does what Netflix does and they do it well. Why try to create a combination and allow Amazon to destory the Netflix model.
- Burn
Most people are like slinkies in that you can't help but smile when you see one tumble down the stairs.
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