Netflix Makes the Right Friends

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You can never have too many friends -- and friends in all the right places are even better. DVD-by-mail pioneer Netflix (Nasdaq: NFLX) just expanded its network of contacts a bit, adding a high-ranking officer of networking giant Cisco Systems (Nasdaq: CSCO) to its board.

Charlie Giancarlo is the chief development officer at Cisco, responsible for 16,000 engineers in fields like emerging technology, digital video, and storage networking. It's easy to see how that kind of expertise would mesh with Netflix's future direction, which is sure to include a heavy dose of networked digital-video delivery.

The Netflix board also includes four former executives from Expedia.com (now a part of IAC/InterActiveCorp (Nasdaq: IACI)), who know more than a thing or two about the online world. Netflix also benefits from the guidance of former U.S. Postmaster General William Henderson as a strategic advisor and consultant. Founder and CEO Reed Hastings himself was just brought onto Microsoft's (Nasdaq: MSFT) board of directors, presenting yet another opportunity to hobnob with the industry elite.

I've noted before that Cisco has unmatched connections, giving the company a distinct competitive advantage. That board seats high-profile names such as Yahoo! (Nasdaq: YHOO) founder Jerry Yang, former Hewlett-Packard (NYSE: HPQ) president Mike Capellas, Stanford University president John Hennessy, and Wells Fargo (NYSE: WFC) CEO Richard Kovacevich -- among many others.

Netflix is wise to surround itself with powerful allies; on the other side of the coin, Cisco gets a direct contact in the emerging online-video industry. "While I love getting my red envelopes today, I can't wait to eventually get all of my Netflix content online," said Mr. Giancarlo, and I couldn't agree more. This is Cisco's vote of confidence in Netflix, and also the rental maven's notice of high interest in networking technologies. It all makes sense.

Further Foolishness:

• Date Netflix, Marry Amazon, Kill Blockbuster
• The Ultimate Rule Maker: Cisco
• Foolish Forecast: Crusher Cisco

Netflix and Yahoo! are two of our Motley Fool Stock Advisor recommendations, and Microsoft is a Motley Fool Inside Value pick. Find out more with a free 30-day trial pass to either service, or both.

Fool contributor Anders Bylund is a longtime Netflix shareholder and customer, but holds no other position in any of the companies discussed here. You can check out Anders' holdings if you like, and Foolish disclosure just jinxed his chance to buy Cisco stock for yet another two weeks. Darn.