Should Carl Icahn Really Scare Netflix? Yep.
The drama surrounding Netflix is at a fever pitch. The company, despite stabilizing a bit and seeing its streaming grow, is trying to fend off Carl Icahn, one of the most tech-hungry activist investors out there.If you haven't been following the drama, you should know that Carl Icahn recently invested enough cash to take a nearly 10 percent stake in Netflix. Worried that Icahn might have something up his sleeve – you know, like acquiring enough Netflix shares to take control over the company – the streaming provider initiated a poison pill.
That poison pill forces would-be investors to pay an inordinate amount of cash to acquire any more than 10 percent of the company. That results in less desire to investors to buy up shares and thus safeguard Netflix from the possibility of being taken over by an Icahn-like buyer.
Of course, there are always two sides to the story. On one hand, Icahn looks like a mean investor that wants to take control over Netflix without any concern for its future vision and shareholders. To critics, Icahn looks like he's ready to score a big profit without thinking seriously about Netflix or the service it provides.
However, those in the Icahn camp don't agree. Icahn believes that Netflix is suffering through some serious issues and to believe that it can continue on this same path without some help is nonsense. Icahn doesn't want to hurt Netflix; he wants to find ways to help the company. And by doing so, he might make a few bucks.
So, who is right? On one hand, we have a company that is scared to death of Icahn and the power he wields. On the other, we have a man in Carl Icahn that has made a living out of acquiring companies and trying in some way to fix them. Surely they can't both be right.
[aquote]There's only one party here that's right[/aquote]
And they aren't. The fact is, there is only one party here that is right. And that party is Netflix.
Looking back at Icahn's history, it's hard to see why Netflix would truly trust him. Remember back in 2010 when Icahn decided that Take-Two Interactive, creators of the Grand Theft Auto franchise, needed his help? He caused major issues among investors and the board and saw to it that three directors were unseated. He replaced them with his own cronies, including his son.
Icahn has also been a massive thorn in the side at Yahoo. For years, he called on Jerry Yang to be ousted, and thought that the company was being run ineffectively. Under the guise of trying to do what was right, Icahn made Yahoo look worse. And it's entirely possible that many shareholders sold off Yahoo stock because of it.
Like it or not, Icahn hasn't become a billionaire by finding really healthy companies and finding ways help them. Over the last several years, especially, Icahn has preyed on companies that need help. And before long, he's in some way involved in a spat with management.
Does that mean that Icahn is bad guy? Not a chance. Does it mean that he doesn't know what he's doing? No. But it does mean that Icahn might be more trouble for Netflix than he's worth. And to not acknowledge that would be a mistake.