The filing outlines the purpose of the transaction, which amounted to $168.9 million including commissions and premiums, with reasons similar to what Icahn has outspokenly claimed in previous leveraged buyout initiatives.
“[Netflix] shares were undervalued due to [its] dominant market position and international growth prospects,” the filing stated.
Today, Netflix trades at $76 per share, a deflated number compared to its five-year peak in July 2011, when it traded a couple of dollars shy of $300 per share. With a market cap of $3.86 billion, the company has a P/E (ttm) ratio of 36.9, a P/B ratio of 5.8 and a P/S ratio of 1.2.
Visit Netflix’s [url=http://www.gurufocus.com/chart/NFLX]GuruFocus Interactive Charts to view the company’s price valuation.
The filing also stated: “The Reporting Persons [Icahn Capital Management] believe Netflix may hold significant strategic value for a variety of significantly larger companies that are engaging in more direct competition with one another due to the evolution of the Internet, mobile and traditional industry.”
According to its website, Netflix, with its Internet subscription service for movies and TV programs, has more than 27 million streaming members in the U.S., Canada, Latin America, the United Kingdom and Ireland.
How it works is Netflix members pay a monthly price to attain access to its services via PCs, Macs, internet-connected TVs, video game consoles, mobile devices and MP3 players. Additionally, Netflix also enables members to organize movie rentals online and distributed via mail, with the added perk of no late fees.
In its 10-Q SEC filing reporting third quarter earnings, its domestic and international subscriptions experienced increases within the three months, compared to the numbers last reported in the second quarter of this year, whereas its domestic mail-in DVD service experienced the opposite in its total subscriptions at the end of the period.
And as the details in the SEC filing have suggested, there are companies, some much larger than Netflix, competing in the swiftly expanding digital media world.
One example is Hulu, a company that operates under pretty much the same premise, and is owned by Comcast (CMCSA), which is currently selling at $37.60 per share.
Additional companies that are seen as competitors include Microsoft (MSFT) trading at $29.45 per share, Amazon (AMZN) trading at $231.55 per share, Apple (AAPL) trading at $596.99 per share and Google (GOOG) trading at $687.02 per share.
To view how Netflix compares to the mentioned stocks, visit the GuruFocus Compare Feature.
Over the past year, Netflix had experienced a positive trendline for its earnings per share. As of the quarter ending in June, Netflix reported $0.11 for is earnings per share.
View more of Netflix’s financial data on its GuruFocus 10-Year Financials page; click on the options to see its varying trendlines.