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TheStreet Open House

The 10 Dumbest Things on Wall Street in 2011

Perhaps no other CEO went from hero to zero in 2011 as dramatically as Netflix boss Reed Hastings. And while we would like to say that Reed has no place to go but up in 2012, you never can tell with that guy -- he's so full of surprises.

6. Reed's Mea Culpa Mess -- published Sept. 23, 2011

Has Netflix (NFLX - Get Report) CEO Reed Hastings been blogging under the influence of the movies his company provides? And if so, which ones? Because that's the only explanation we can come up with for his wacked-out apology to customers Sunday night.

Here's the nuttiness that Netflix subscribers woke up to on Monday morning, a missive straight from Reed that started: "I messed up. I owe everyone an explanation."

First of all, can you think of a worse way to start a letter? The guy sounds more like a teenager who just crashed the family car than a CEO detailing a new business plan. Right from the beginning this whole letter is disturbing. Did anybody from the Netflix PR staff take the time to review this message? Or, did Reed post this poppycock in the middle of a Jerry Maguire moment?

And it only gets worse from there.

"It is clear from the feedback over the past two months that many members felt we lacked respect and humility in the way we announced the separation of DVD and streaming, and the price changes. That was certainly not our intent, and I offer my sincere apology."

Now he sounds like he's been watching too much Kramer vs. Kramer. Dude, get a grip. You are splitting up your company, not a nuclear family.

Here's the deal about Reed's condescending, borderline-creepy, confession.

Netflix is going to rebrand its DVD-by-mail service as "Qwikster," as it separates those operations from the streaming content business. The company plans to keep the name "Netflix" for streaming. According to Reed, Netflix has no plans to roll back the price hikes that caused so much consternation this summer because the streaming and DVD-by-mail are becoming two quite different businesses, "with very different cost structures, different benefits that need to be marketed differently, and we need to let each grow and operate independently."

Put it all together and you can see why his customers are revolting and his stock is getting smashed, down 36% in the last month alone. Quite simply, Reed's subscribers are being walloped with a triple whammy: higher fees, fewer movies and now less convenience. To quote Network, they are "mad as hell" and "not going to take this anymore!"

So what does the former rock star Reed say?

"Both the Qwikster and Netflix teams will work hard to regain your trust. We know it will not be overnight. Actions speak louder than words. But words help people to understand actions."

Oy. What drivel! Maybe he was watching political movies like Citizen Kane, A Face in the Crowd or The Candidate when he wrote that note.

Wait! Scratch that. We've got the movie that inspired Reed. It must have been The Jerk.

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