Netflix Investor Icahn Sees More Room for Shares to Rise

Jan. 24 (Bloomberg) -- Billionaire investor Carl Icahn discusses the reasons he invested in Netflix and his outlook on Herbalife and Bill Ackman. He speaks on Bloomberg Television's "Street Smart." (Source: Bloomberg)

Carl Icahn, the billionaire who holds a 10 percent stake in Netflix Inc. (NFLX), said he sees further room for shares of the online video service to climb after they more than doubled in four months.

“We still own every share we bought and we believe it’s still got tremendous potential,” Icahn, 76, said yesterday in a telephone interview after the Los Gatos, California-based company reported a surprise fourth-quarter profit.

Netflix surged 42 percent in New York today, its biggest gain ever, following results yesterday that were driven by U.S. and international subscriber additions. That leaves Icahn with a gain of more than $490 million since September, based on regulatory filings and data compiled by Bloomberg. The investor, who has suggested Netflix might be a buyout candidate, said he’s met with Chief Executive Officer Reed Hastings three or four times.

“I’ve always found him to be an extremely bright and engaging guy,” Icahn said. “It’s my belief that if somebody came in with a very compelling offer he would consider it but that would be his decision.”

Icahn paid $168.9 million for stock and options totaling 5.54 million Netflix shares, mostly in September and October when it was trading at about $58. Netflix rose to $146.86 today to close at its highest since September 2011, indicating the value of Icahn’s stake has risen by about $492 million.

Photographer: Scott Eells/Bloomberg

Carl Icahn, billionaire investor and chairman of Icahn Enterprises Holdings LP. Close

Carl Icahn, billionaire investor and chairman of Icahn Enterprises Holdings LP.

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Photographer: Scott Eells/Bloomberg

Carl Icahn, billionaire investor and chairman of Icahn Enterprises Holdings LP.

“One of the parameters we use is when everybody doesn’t like something, that’s when you buy it,” Icahn said.

Surprise Profit

Netflix, the world’s largest online-video service, posted an unexpected fourth-quarter profit of 13 cents a share, after signing 2.05 million new U.S. streaming subscribers, for a total of 27.2 million, and fending off competition.

The company surpassed 6 million customers overseas, and losses in the international segment were smaller than the company had projected. Hastings signaled in his quarterly letter to shareholders that those losses will shrink.

In the letter, Hastings said Netflix has had constructive conversations with Icahn about creating a more valuable company, without elaborating.

Icahn declined to say whether he will seek a board seat at Netflix. The company adopted a poison pill in November to protect against a hostile takeover.

In a filing at the time, Icahn called the poison pill “an example of poor governance.” He also said Netflix had ignored shareholder wishes that the company “de-stagger its board.”

To contact the reporter on this story: Meg Tirrell in New York at mtirrell@bloomberg.net

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net

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