Netflix shares soar after Icahn reports 10 percent stake purchase

Thu Nov 1, 2012 12:12am EDT
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By Lisa Richwine and Soyoung Kim

(Reuters) - Billionaire investor Carl Icahn bought 10 percent of Netflix Inc (NFLX.O: Quote), presaging another bruising corporate battle and raising the possibility that the pioneering movie and TV-streaming company would get acquired.

Netflix shares rose 14 percent to close at $79.24 on Nasdaq after Icahn disclosed in a regulatory filing he purchased shares and call options in the company that boasts more than 30 million subscribers globally.

Icahn, known for shaking up management, said in an interview he felt Netflix was undervalued and would make "a great acquisition for a number of companies."

"I think there would be a bidding war if it was ever up for sale," Icahn said.

Netflix has been the subject of periodic acquisition speculation, with potential names tossed around from Microsoft Corp (MSFT.O: Quote) to Inc (AMZN.O: Quote). Last Friday, shares jumped 13 percent after rumors of a potential Microsoft purchase, which the company and Netflix denied.

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, faced new competition and increased spending on content and an international expansion.

Icahn said Netflix was in a "great position" to take advantage of consumers' shift to watching more video content through streaming to televisions and mobile devices.

"You're going to see a major change," he said. "I'm a movie buff, and I haven't been to the movies in six months. I watch everything on TV."   Continued...

The headquarters of Netflix is shown in Los Gatos, California September 20, 2011. REUTERS/Robert Galbraith