Amazon wanting Netflix: crazy? | Hacker News Reader

Amazon wanting Netflix: crazy?

latimes.com

11 pointsAnon8419 comments

Yes. The sales tax consequence to amazon is huge. I really don't know why these rumors keep popping up every couple of years. Perhaps it's because Werner Vogels spoke at our weekly tech talk thing?

I'm sure that Amazon sees the internet sales tax loophole coming to an end. As states get more desperate for tax revenue, they'll be pushing hard to require internet sellers to collect and pay sales tax.

I don't know that this makes the Netflix rumor any more likely, but you can't just dismiss it based on sales tax implications.

Interesting. How many states does Netflix have tax nexus in? Amazon already has DCs in ten states.

there are 58 dvd distribution centers or hubs. most states have at least one.

Can you expand on what these consequences are a bit for those of us unfamiliar...?

Netflix has facilities in most states. Amazon would have to collect sales tax in most (if not all) of these states.

http://kara.allthingsd.com/20090714/amazon-buys-netflix-micr...

Doesn't Amazon have facilities all over the country as well?

Almost all of them are in places where there is no local or state sales tax.

One exception of course being WA (where Amazon has its corporate headquarters) which has a substantial sales tax but no income tax.

Am I the only one who's thinking about pricing of this deal?

Netflix market cap: $1.8 billion Amazon market cap: $35 billion

Wrt future prospects, Netflix is not dying, but is in fact at the forefront of digital delivery. They won't sell it cheaply. It would be one very-very expensive purchase.

Depends. Many shareholders may be willing to take a 30-40% price premium, particularly in this market -- and that would raise their price to $2.3bn to $2.5bn, which, if $1.8bn is a steal, is still a good deal.

Netflix's current market cap is actually $2.5 billion: http://www.google.com/finance?q=netflix

Yikes. You've undermined my faith in the Google quick answers. I should be more skeptical, should've looked at the source.

Still, the point stands even more firmly :) I suppose I don't think it would be worth that much to Amazon, proportion-wise.

I think it would be structured in a manner of 60%+ in stock and other in cash with time limits (I.e. youtube deal) then the money paid for it would be created in the market from the stocks soaring etc.. so paying 3b for netflix might cost 1b cash.

I haven't thought of it that way, but you're right, it's probably a good investment. My fear is that acquisition often kills the very thing that makes the company what it is (including its long-term positive prospects), even with the best intentions.

I don't think it's so crazy. A solid digital delivery system would be a great compliment to the Amazon Cloud. Beyond digital delivery, I would think that Amazon would be able to make some great use out of the Netflix recommendation system.

My conspiracy theory: Options expire on friday. Watch the stock deflate next monday.

I think it's no coincidence that this news came out after Netflix awarded the winner of their Netflix Prize for increasing the accuracy of prediction.

It's coincidence. The contest has almost no implication to Netflix as a business.

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