Here are the exerpts of the article on Netflix (NFLX) and Microsoft (MSFT) by Nigam Arora.
Netflix Dodges Facebook Bullet
Most investors, including me, have been very concerned about the threat that Facebook poses to Netflix (NFLX). I am long on Netflix from $101.00. I carry a heavy weight on my shoulders as subscribers to ZYX Buy Change Alert are also long from $101.00, and I have often mentioned to the subscribers that Netflix is the most risky stock in the model portfolio. We have taken profits along the way and now hold only a small position.
My concern was heightened on March 8, 2011, when it was announced that Facebook and Warner Bros. had reached an agreement to make movies from Warner Bros. available on Facebook. Facebook with its own currency system and 600 million users certainly has the potential to kill Netflix.
I took solace in that neither party made a splash about the announcement. I also took a small comfort that the test included only one three year old movie Dark Knight. The Dark Knight cost 30 Facebook credits, which is $3.00 U.S., for a 48 hour viewing window. It was hard to imagine people exchanging $8.00 a month Netflix subscription for a single movie rental for $3.00.
The announcement today that Reed Hastings, CEO of Netflix, is joining the board of Facebook has come as a welcome relief. This development pretty much kills the idea of Facebook competing with Netflix.
In my analysis, Netflix poses less risk today than it did….read more
Stop on NFLX is now at $219.