The Lead: Prospects for a Netflix deal with cable companies helps boost stock
Seen as an enemy for cable companies since its streaming-video service started taking root, Netflix is reportedly looking to partner with U.S. pay-television providers to ensure that customers can access the video-on-demand service through the same set-top boxes that power their current service. While no deals have been reached and there are several potential stumbling blocks, the prospects of such a move sent stock in the Los Gatos company soaring Monday.
The Wall Street Journal and Bloomberg News reported separately that Netflix is in early discussions with U.S. cable giants such as Comcast and Time Warner about offering set-top boxes that could access Netflix, and that the company is closer to a deal with smaller providers that utilize technology from San Jose's TiVo; both reports cited anonymous sources for the information. Netflix has already signed similar deals in Europe, including a deal with Virgin Media last month that helped push shares to an all-time high.
"Our partners are interested in delivering Netflix to their subscribers," TiVo spokesman Steve Wymer said earlier this month, according to the Bloomberg report. "We stand ready to replicate our well-received offerings with Virgin and Com Hem with any partner or future partner."
Most Netflix users currently stream the service on television sets through a variety of dongles and gaming systems, but the service could expand its customer base by offering accessibility through a system cable customers already use on a daily basis. Cable companies, which face the prospect of customers cutting the cord permanently on pay-TV offerings, could find the addition helps it retain customers who are looking for greater freedom in options and billing.
The possibility for a mutually beneficial relationship showed up on Wall Street, where Netflix stock gained 7.8 percent to $324.36; Comcast moved 0.9 percent higher to $46.46; Time Warner increased 0.1 percent to $68.04; and TiVo grew by 1.5 percent to $12.52.
Netflix may have received a bigger boost than other companies involved in the report because of a note from JPMorgan analyst Doug Anmuth, who raised his price target to $340 on bullish expectations for the company's customer growth thanks to its original programming.
"We expect Netflix to build strong brands around its originals while the company's broad selection of content is likely to appeal to a wider audience over time," Anmuth wrote.
Monday afternoon, Netflix announced that its original programming slate is growing, as the company announced that it had signed a deal with the creators of "Damages" to produce a "suspenseful family drama" for the service, according to Netflix executive Cindy Holland.
"We are absolutely thrilled to be creating an original series for Netflix -- a company committed to cutting-edge storytelling in a vibrant, new space," the creative team, Todd A. Kessler, Daniel Zelman and Glenn Kessler, wrote in Monday's news release.
SV150 market report: Facebook gains after acquisition, chip-equipment firms up
Wall Street gained overall Monday, as politicians seemed on the way to resolution on their most recent fiscal impasse. The Dow Jones industrial average and Standard & Poor's 500 gained 0.4 percent each, while tech stocks had a stronger day: The tech-heavy Nasdaq increased 0.6 percent while Silicon Valley's largest tech companies gained 0.7 percent.
Facebook moved 0.8 percent higher to $49.51 after confirming the acquisition of an Israeli company that will give the Menlo Park company its first office in a country that has become a technology hotbed. Onevo, which follows Israeli tech companies Waze and Anobit as big-money buys by Silicon Valley companies, makes compression technology that can help save data space on mobile devices, technology that a Facebook spokesman said would help CEO Mark Zuckerberg's nascent effort to expand the Internet globally. The purchase price was not announced, though an Israeli newspaper said that Facebook spent as much as $200 million on the deal.
Silicon Valley chip-equipment companies also moved higher Monday, after JP Morgan analyst Harlan Sur checked in on three Bay Area companies, initiating coverage on Applied Materials, Lam research and KLA-Tencor by stating that a coming turnaround in the semiconductor industry will begin with the equipment makers. Santa Clara's Applied Materials gained 0.6 percent to $18.10, Fremont-based Lam increased 0.9 percent to $53.30 and Milpitas-based KLA-Tencor moved 1.9 percent higher to $62.87. Fellow Silicon Valley chip-equipment companies Ultra Clean Holdings, Ultratech, Nanometrics, FormFactor and Mattson also gained Monday, as did a number of semiconductor manufacturers, such as Intel (INTC), Advanced Micro Devices and Nvidia.
Yahoo (YHOO) declined a day ahead of its earnings report, which will join Intel on Tuesday as the biggest Silicon Valley financial report of the young earnings season; the Sunnyvale company dropped 0.4 percent to $34 as previews focused on changes in Yahoo's advertising business.
The SV150 index of Silicon Valley's largest tech companies: Up 9.47, or 0.71 percent, to 1,350.86
The tech-heavy Nasdaq composite index: Up 23.40, or 0.62 percent, to 3,815.27
The blue chip Dow Jones industrial average: Up 64.15, or 0.42 percent, to 15,301.26
And the widely watched Standard & Poor's 500 index: Up 6.94, or 0.41 percent, to 1,710.14
Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/jowens510.