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Netflix stock nears 10-week high on Amazon buyout rumor

July 13, 2009 |  2:37 pm

Netflix Netflix Inc. shares closed at a near 10-week high today as rumors swirled that online commerce giant Amazon.com Inc. was looking to buy the 12-year-old online movie rental company. 

Netflix rose $2.12 to $42.19 with a trading volume of 4.2 million, one of the highest in months.

A Bloomberg report quoted an analyst attributing the trading activity to "renewed takeover talk" surrounding Netflix, with Amazon at the center of the conversation.

But other analysts were skeptical. 

"Adding another business that would essentially cannibalize from the moves they’re already trying to make just doesn’t make a whole lot of sense," said Steve Weinstein of Pacific Crest Securities.

"Amazon is ramping up digital distribution very quickly," he said. "They’ve obviously done a good job with e-books, and they’re making some progress with music.  So I don’t think anyone’s that much farther down the road than they are."

Neither Amazon nor Netflix would comment, saying that they don't respond to rumors and speculation.

Today's buyout rumor resembled whispers from June 2007 that spiked Netflix's stock price by 5% with one analyst predicting Netflix could fetch $1.5 billion if acquired by Amazon.

Both companies are big players in the online streaming business, where consumers can watch movies through special set-top boxes like those made by TiVo and Roku.  Amazon, which charges for each viewing, tends to have newer, more popular films available for download, while Netflix streams a more limited selection of older films to its subscribers. 

Netflix has a catalog of over 100,000 movies and television shows available by mail -- its primary delivery mechanism -- but streams only about 12,000 of those shows via its set-top software.  Amazon has made at least 40,000 movies available for streaming.

-- David Sarno

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