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Netflix, Inc. (NFLX) Message Board

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  • secragtman secragtman Jun 29, 2007 1:26 AM Flag

    from 26 to 19,now from 21 to.......

    If BBI weren't a billion in debt, and running out of time, then building subs at the cost of piling up MORE debt might work. But interest rates are climbing, as is BBI's red ink, and the clock is ticking. That's BBI's big picture. And you are incredibly naive to think that BBI's debt isn't a signficant liability and burden. When BBI has burned through their cash (which won't take long under their current pricing), you can bet future lenders are going to be a lot more scrutinizing about BBI's failed business plans (almost 300 more stores closing), and that BBI's borrowing rate will be higher as rates in general rise. NFLX, on the other hand, can continue to do what they've been doing because they do it better, cheaper and they turn a profit already. The game isn't just about subs; eventually you have to turn a profit, which isn't in BBI's near future. Yes, BBI can jack up the Total Access price, but they are likely to lose a lot of customers, who aren't generally as loyal to BBI as NFLX customers are to NFLX.

    Ultimately it's a bold stroke by BBI, but no matter what course of action they take, they lose in the end, be it by bankrupcy or alienating and losing their sub base by jacking up their prices to try and survive.

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