I find no fault with my Foolish colleague Anders Bylund's history lesson on Netflix
For a company to survive and thrive into the future, it must focus on the next generation of threats. I pointed out last November that even with traditional movie-rental stores in decline, Netflix is still stuck between a rock and a hard place. On one side, video-on-demand services from the likes of Time Warner
As fiber-optic Internet connections get added to people's homes, video download services and instant-rental business will likely add yet another level of competitive threat. Netflix has a great past, but its future is on shakier ground. As we teach at Motley Fool Inside Value, companies are valued based on their potential future earnings prospects. The past establishes a track record, but it says nothing about what will happen tomorrow. For Netflix to be worth what the market values it at today, it needs to have both a solid strategy and the technology in place to fight the next war, not the last one. Until I see definitive plans in that direction, my money is staying away.
At the time of publication, Fool contributor and Inside Value team member Chuck Saletta had no ownership stake in any of the companies mentioned in this article. The Motley Fool has a disclosure policy.