《1 Case Blaine Kitchenware》.pdf

CASENI N etF, Inc. In July 2000, Reed Hastings, chairman ,md CEO of NetF, Ine., faced a criticaI deci:;jon. ThrlC months earlier, following one of tl1l worst episodes O!l record for the NASDAQ market, NetFlix had submitted it:; 5-1 filing for its initial Pllblic offering (Iro).! A:; il rlsult of thl market downturn, many Internet companies had been forced to withdraw their 1[0s. Invl,:-;tment bankers indicated to Hastings that NetFlix would 11(.Cd to show positive cash flows within a twdw-month horizon in order to have a succes.,,,flll offering. Hastings knew that NetFlix was at a crucial stage. With revenU($ doubling evcry six months, NetFlix was enjoying tremendolls stlccess. But continucd succcss depcnded on thl companys ability to sustain triple-digit growth (or the fOfesceable future. Soon, Hastings would have to decide whether or not to proceed with the companys anticipated IPO. Hastings askl..\l Barry McCarthy, the chicf finnnciai officer, to re-(vnluate the cash flow requircments of thc companys currcnt business pian, to suggest modificùtions that would improvc the companys projected cnsh flows, and to makc ù rccommcndation on whether the company should go forward with its plùnned offcring. As McCarthy rcviewed the existing NetFlix business model, hl considered possiblc chùnges that might allow thc company to procccd with its planncd IPO ùnd yet sustùin thc typc of futtlrl.. growth that would be nccL,:-;sary for thc compùny to achieve its long-run objcctivcs. McCarthy was acutcly aware of thc companys currcnt financing mtd, but he worried about thc cffect thùt changes to the business pian might hnve on thc companys current operatillns. TheCompany