Why Netflix Could Fly Even Higher

 | Jan 24, 2013 | 7:07 PM EST
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"They need Netflix (NFLX) as much as Netflix needs them." And with that line, you saw one of the major reasons that Netflix took off today, not just because of the 8% increase in subscribers, even if they are pure profit.

Right now, the biggest hits on television are serial productions for outfits such as AMC and FX. "Mad Men," "Sons of Anarchy," "Justified," "Breaking Bad," you name it, that's what people talk about, that's what they watch.

We know that the broadcast networks don't like serials or arcs. They want to able to plug and play any episode out of order -- think "Seinfeld" or "Law & Order."

But the real heavyweight stuff that's getting the great numbers, like "Walking Dead," can't be watched plug and play. They have to be watched in order, so you can't just jump right in.

Enter Netflix. As Reed Hastings said on the call, the makers of "Breaking Bad" and "Mad Men," two examples he called to mind, need Netflix so that people can catch up by bingeing. It empowers these small networks, and it actually makes them more valuable, not just Netflix.

That, plus the new tablets and the ease of streaming, including the button on many new TV clickers, explains the resurgence here.

And it is impressive.

Which got me to thinking how obvious it is that Apple (AAPL) has to buy Netflix. Instantly, Apple would become the destination for new TV. Instantly, Apple would be the de facto cable company for youth that doesn't want to have to wait until Thursday night at 8 for their program.

And instantly, people would binge and get started on new sets of shows effortlessly while being a friend to those who make that content. It can make content itself or augment the content that Netflix is buying. With 28 million subs who want to watch on their "phablets" -- smartphones and Tablets -- a loaded Netflix app may be the best way for Apple to rekindle the affections of young people.

Small amount of money for large binge-watchers and their friends. Something that would send Apple's stock up maybe 10% when it did it, or maybe, given how oversold this one is, even more.

Sure, Netflix has doubled.

But, like Apple, it used to be much higher. This can be as easily justified as watching the new season of "Justified"! 

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