It is not too late for Apple (AAPL) to buy Netflix (NFLX). Sure, Netflix has been on a tear, up $100 since the bottom, but this beautiful tie-in with Facebook (FB) for entertainment programming sharing makes Netflix the perfect fit for the computer behemoth. Why? Because Apple has been lacking social, and you need social, mobile and the cloud to triumph in this brave new gadget world.
I know Apple has been tantalizing us about the idea of the iTV, but unless it buys a Sprint Nextel (S) or a Clearwire (CLWR), the airwaves could elude it. I simply do not believe that the cable companies are willing to comply with Apple, meaning ceding the customer to them, which is what would be required to have a successful iTV. I say that because Walter Isaacson, Steve Jobs' biographer, told me that at a Bucknell fundraiser last fall. If Isaacson thinks that Jobs couldn't get it done because you can't roll the powerful cable companies like you could the record companies as he did for iTunes, then you know this current team sure couldn't do it. Jobs was a bully, and these fellows are simply tough negotiators. You need both to make the cables come to the table, and neither will get you what you need: the customers' names.
Ah, but there is a $10 billion company that has the names of 27 million households in this country, and they don't care if they are being billed by Netflix or by Apple. In fact, I think they would like the seamlessness of being able to rent movies from iTunes or from Netflix directly.
More important, you have Netflix embedded on every clicker, and the clicker is the province, the springboard that Apple needs so badly to dominate the living room, especially now that Netflix has the social tie-in with Facebook.
Here's what's most important. Ten billion is a rounding error for Apple, given its cash hoard. Right now, that $10 billion isn't doing anything for it. It earns almost no return because of the Fed's obsession with low interest rates. The company hasn't been opportunistic in returning capital or taking advantage of this huge price break, at least as far as I can tell. It certainly isn't using the playbook of the No. 1 performing stock since the bottom of the market in March of 2009, Wyndham Worldwide (WYN), which has returned every dollar it could to shareholders in the form of aggressively raised dividends and truly aggressive buybacks.
But Netflix would be the game-changer, the one that has already managed to build fabulous bridges with the entertainment companies, many of which need the company to get people started in the cable dramas that are impossible to crack into without Netflix. It would also give the company Reed Hastings, one of the most capable growth CEOs of our time.
It's pretty simple, Apple needs growth, and it needs it in a visible, red-hot way. Nothing is hotter than Netflix. Only a hidebound management, lacking in creativity, would miss this opportunity, one that every other company would have to pass on because of the tremendous gain in Netflix's share price, but that increase wouldn't mean a thing to the most cash-rich company in the world.