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Normally having a high-profile investor like Carl Icahn Loading... buying your shares would be welcomed - but streaming service Netflix Loading... is worried about having its wings clipped after the activist investor bought a chunk of the company.
Netflix's shares jumped 13.9 percent after it was revealed Icahn had taken a 9.98 percent stake in the company. But Netflix's board are treating the share purchase as a precursor to a hostile takeover. The firm has even put in place a "poison pill" strategy which would flood the market with Netflix shares if any investor takes more than a 10 percent stake.
It may sound like a board of directors keen to stay in their jobs but there is probably more at stake than that.
The firm's subscriber numbers have taken a hit recently, due partly to the firm's decision to raise prices. It is also facing a tough battle in the UK with BSkyB Loading... , which has showed how far it is prepared to go to fend off the threat from younger web-centric rivals by signing exclusivity deals with Universal and Warner Bros and launching the IPYV service NowTV, available to non-subscribers.
This table shows that while Netflix's revenue is impressive, the key figures are net income and the amount Netflix spent on on developing its technology and products.
They are almost exactly in step over the four years. Even more importantly, that tech investment rose as a proportion of revenue from 6.6 percent to 8.1 percent between 2008 and 2011.
The fact is Netflix is still a young company in a very immature market. It has to keep investing in growing its base both at home and abroad, and in improving its technology. Constant scrutiny and interference from investors with a different agenda could make it difficult to focus on those goals.
As Richard Waters says in the Financial Times Loading... , it adds weight to the argument that: "growth companies need stronger defences, and their founders deserve the protection from outside influence, if they are to hit their long-term potential."
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