I'm not much of a matchmaker.
People who I think would be perfect for one another rarely pan out. Cupid, you have nothing to worry about.
I'll probably have better luck at hooking up companies, because at least there the synergies and catalysts of combination are apparent. There will always be chemistry issues, naturally, but partners in corporate relationships pack light when it comes to emotional baggage.
So, Cupid, let me borrow you bow, and we'll see where my arrows land.
Microsoft and Netflix
Sometimes, even the best of friends realize that they were made for one another. Microsoft (Nasdaq: MSFT ) and Netflix (Nasdaq: NFLX ) share some history. Netflix CEO Reed Hastings sits on the software giant's board of directors. Netflix's push for digital streaming has the DVD-rental specialist in negotiations with just about every Web-friendly home-theater appliance, except for the rivals of Microsoft's Xbox 360.
I'm not optimistic about the rollout of Microsoft's Zune HD next month. But do you know what would give the Zune HD a shot? It would be a contender if it became the first portable media player to stream from Netflix, ideally with the ability to temporarily download content so it doesn't have to be perpetually connected to Wi-Fi.
Can this happen without an outright merger? Of course. I'd be surprised if it isn't announced before the end of the year. However, Microsoft and Netflix need each a lot more than they know.
Microsoft's software stronghold is fading in an open-source and cloud-computing future. Netflix is on top of the world right now, but it has tasted hardships before. Microsoft's entertainment division will grow in the coming years, and Netflix is a no-brainer "best of breed" buy.
eBay and Yahoo!
"I want to merge Yahoo! (Nasdaq: YHOO ) with eBay (Nasdaq: EBAY ) ," Jim Cramer told Mad Money viewers more than two years ago. This one is an old rumor. We were talking about it nearly a decade ago.
The chatter has been dead on this potential pairing for a while, and that's a pity. It makes a lot more sense now than it did when both companies were growing market darlings.
Yahoo! shares are still smarting from its poorly received search deal with Microsoft. eBay is coming off yet another quarter of year-over-year declines in its namesake marketplace business. Once eBay spins off Skype, PayPal will be the lone growth component.
Granted, this deal would have made more sense before Yahoo! decided to hand Microsoft's Bing the search -- and paid-search -- reins. It will now lack the contextual firepower to maximize the monetization of eBay's ad-supported classified sites.
Google (Nasdaq: GOOG ) would probably be a better tactical fit for eBay, but there is no way regulators would sign off on that pairing. With Yahoo!, though, eBay has a shot.
Liberty Media and Sirius XM Radio
Right now, Liberty Media (Nasdaq: LCAPA ) is on top of the world. It was able to lend Sirius XM Radio (Nasdaq: SIRI ) money bearing interest as high as 15%, and it received a 40% chunk of the satellite-radio operator as an "if you act now" bonus.
Now that Sirius XM's cash flows are improving and its stock price has roughly tripled, Liberty's terms appear brilliant on all counts. Sirius XM is now less of a credit risk, and that 40% stake has appreciated by far more than the money it let Sirius XM borrow.
Why buy the cash cow when you can drink the milk for free? Well, Liberty's presence as a major stakeholder is enough to scare away potential suitors, but it also has validated the satellite-radio model among investors. Sirius XM may have shed subscribers in each of the past two quarters, but the bottom line has improved dramatically.
In short, it may as well buy the other 60% of Sirius now, before the company grows more expensive later.
Your turn! What two public companies do you think should hook up? Draw your hearts in the comment box below.
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