Greedy Big DVD!!!

If there's any online media that would be free from infantile whining about corporate greed, it'd be investor Web sites, right? For the most part perhaps, but Motley Fool's Rick Munarriz found a corporate giant to attack for making money: Netflix, the online DVD rental service.

"How much money do you need when your largest competitor is against the creditors' ropes? Or when a digitally delivered future may mean thinner moats but without the same kind of capital intensive structure," whined Munarriz, who owns stock in the company. "There's never enough money, apparently, if you happen to be Netflix (Nasdaq: NFLX). In a baffling move, the company is looking to initiate a secondary offering next month that will dilute investors by an additional 3.5 million shares while raising about $100 million."

In short, argues Munarriz, "Netflix doesn't need the money," and issuing more shares " is just avarice. Pointless, stupid avarice."

Actually, Netflix's growth and profitability are far from a sure thing, particularly as the market moves towards downloadable movies in lieu of DVDs physically shipped via U.S. Mail.

Forbes magazine reported that Netflix opened its first quarter in 2005 with a $9 million loss but managed to climb back and is now $4 million after the first quarter of 2006. And while Netflix currently offers only DVD and HD DVD formats, Forbes reports Netflix CEO Reed Hastings plans to branch out the service to offer downloadable movies online. Such an endeavor doesn't come cheap, particularly as movie "studios have ramped up their own downloading efforts through CinemaNow and Movielink," reports Forbes's Steven Zeitchik.

Ken Shepherd
Ken Shepherd
Ken Shepherd is the Managing Editor for NewsBusters