Netflix tells Icahn it is open to his input

LOS ANGELES Thu Nov 1, 2012 4:08pm EDT

LOS ANGELES (Reuters) - Netflix Inc said on Thursday it was open to input from billionaire Carl Icahn, the activist investor who now controls 10 percent of the video rental company's shares a day after his surprise investment.

"We have many shareholders, now including Mr. Icahn, and we're always open to their perspective on how to build on our success," Netflix said in a statement issued in response to Icahn's disclosure of his investment in a regulatory filing on Wednesday.

The filing said he had bought shares and call options that gave him a 10 percent stake in the subscription video service.

The activist investor known for shaking up management told Reuters on Wednesday he felt Netflix was undervalued and would make "a great acquisition for a number of companies."

Netflix shares jumped 14 percent on Wednesday after Icahn's stake was disclosed. They slipped 1.6 percent to $77.94 on Nasdaq on Thursday.

Netflix has been the subject of periodic acquisition speculation, with potential names tossed around from Microsoft Corp to Amazon.com Inc. Last Friday, shares jumped 13 percent after rumors of a potential Microsoft purchase, which the company and Netflix denied.

An Amazon.com spokeswoman said on Wednesday the company would not comment on speculation.

Netflix was a Wall Street darling with red-hot growth that boosted shares as high as $304 in July 2011. Many investors soured on the company after it imposed an unpopular price rise in the face of new competition, and increased spending on content and an international expansion.

Netflix CEO Reed Hastings argues it is worth the investment to get into foreign markets ahead of rivals. The company projects a fourth-quarter loss due to start-up costs in four Nordic countries.

Janney Montgomery Scott analyst Tony Wible said Icahn's purchases had generated new optimism among investors, but cautioned Icahn's entrance "does not assure a turnaround, and could disrupt growth if he were to challenge management."

"In a best case and least disruptive scenario, he could push shareholders to embrace a sale of the company," Wible said in a note to clients. Wible has a "neutral" rating on Netflix shares.

(Reporting by Lisa Richwine; Editing by Leslie Gevirtz)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.