Apple Should Buy Netflix, Says Analyst

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Apple has an extremely large amount of cash on hand – $51 billion – and there’s been a lot of speculation about what the company will do with that money. Analyst Brian Marshall of Gleacher & Co. has an idea – why don’t they buy Netflix? The DVD mail rental company has made clear for years that their intention is to eventually go all streaming with no DVD-by-mail services. Netflix is a major feature of Apple’s Apple TV. Marshall says that it could become a keyselling point if it was only on Apple products, and it could make money for the company in it’s own right.

The buyout would cost Apple about $12 billion, Marshall figures, which would be a healthy 20% premium over Netflix’ existing stock capitalization. Marshall believes that Netflix would be advantaged because, in his calculations, iTunes movie and TV rentals are already becoming a fast competitor to Netflix. I’m not sure I believe it myself, but despite being half old as Netflix online streaming, Marshall says that iTunes movie rentals has 10% the customers of Netflix.

Marshall also says that acquiring Netflix would help Apple’s catalog of rentals – something I’m not quite sure is a good idea. In the post-iTunes era, Apple has no trouble making friends in Hollywood, and besides, Netflix isn’t exactly a golden child in Hollywood. There are stories of movie studios and TV networks getting upset at Netflix, trying to block them out, etc. In that regard, I think that Netflix’s reputation would be improved, not Apple’s.

I’m not sure the situation would be a win-win for Netflix, either. The company is currently available on a ton of different set-top devices, from Roku, to the Apple TV, to the Xbox 360, Wii and PlayStation 3, etc. It’s proven itself a platform-agnostic service that customers really go for. Is locking themselves to Apple a good idea? Of course, Netflix is a publicly held company, and the stockholders pull the strings, ultimately. And that AAPL money goes a long ways in changing minds.