Categories Earnings, Technology

Top analyst drops a bombshell, predicts Microsoft will buy Netflix

A media analyst with over four decades of experience just dropped a bombshell today. In an interview with CNBC, Porter Bibb, the managing partner of Mediatech Capital Partners said he expects Microsoft (MSFT) to buy Netflix (NFLX) in the next two years – a prediction that is expected to spark discussions and speculations throughout this whole week.

The Windows-designer has its operations going at a steady space in all imaginable spaces in the technology field, from software to cloud services. However, lack of foothold in the media content sector will haunt the company in the coming years, prompting it to resort to M&A to bridge this interstice. The most likely candidate for a merger is expected to be none other than Netflix, according to Bibb.

Netflix image
Image courtesy: Matthew Keys

Though he stayed short of providing an exact timeline for the merger, he expects it to happen in the next 18 to 24 months. The merger makes sense as, on one end, it gives Microsoft a big bang entry into the content streaming segment, on the other end, Netflix will be able to utilize the former’s massive cash reserves to produce more original content without worrying about debt obligations.

“Netflix, while a pioneer as a streaming service, doesn’t have a business model that is sustainable,” said Bibb. “For every one in two movies, one makes a significant loss while one makes a significant gain…No one has cracked the code to fix this.”

However, a Microsoft-Netflix love story is an unlikely one, given the latter’s high market valuation. Netflix shares have more-than-doubled in the trailing 12 months, and currently holds a market cap of around $140 billion.

Lack of foothold in the media content sector will haunt Microsoft in the coming years, prompting it to resort to M&A to bridge this interstice.

Many investors have been boggled by this prediction since Netflix is a synonym for cash-burn and there is a lot of uncertainty revolving around when (or even if) the company will turn profitable. In its most recent earnings conference, the streaming giant had revealed that it had borrowed almost $10 billion, and plans to spend as much as $8 billion this year to create original content.

Both the companies have not yet commented on the prediction. Microsoft shares were trading down 0.5%, while Netflix shares were down 0.7% during the regular trading hours today.

Most Popular

AVGO Earnings: All you need to know about Broadcom Q1 2021 earnings results

Broadcom Limited (NASDAQ: AVGO) reported first quarter 2021 earnings results today. Total revenue increased 14% year-over-year to $6.65 billion. GAAP net income was $1.3 billion, or $3.05 per share, compared

Infographic: Costco (COST) Q2 2021 sales up 15%; earnings miss

Retail giant Costco Wholesale Corporation (NASDAQ: COST) reported higher earnings and revenues for the second quarter of 2021. Earnings missed analysts’ expectations, while sales beat. Net profit was $951 million

Will shifting to as-a-service model help Hewlett Packard in emerging stronger from COVID?

With the corporate world rapidly shifting to cloud-native computing after the virus outbreak changed work culture and the way businesses operate, technology providers are aggressively innovating their offerings. Hewlett Packard


Add Comment
Viewing Highlight