Netflix founder named to Microsoft's board

The newest member of Microsoft's board of directors is an entrepreneur who created a new way of delivering videos to consumers.

Reed Hastings, founder, chairman and chief executive of Netflix, the DVD-by-mail video-rental service, is joining the 10-member board representing Microsoft shareholders, the company announced Monday.

Microsoft has had nine directors since Ann McLaughlin Korologos stepped down in November.

In the same announcement, Microsoft declared a quarterly dividend of 10 cents a share, payable June 14 to shareholders of record on May 17. It is the third quarter in a row the company has issued a 10-cent dividend.

"Reed's track record for delivering innovative and disruptive technologies to market is very impressive," Microsoft Chairman Bill Gates said in a statement. "With his rich consumer and technology background, he will be a tremendous addition to our board."

Hastings, 46, founded Netflix in 1997, the same year his previous venture, Pure Software, was acquired by Rational Software, which was later bought by IBM.

Netflix has 6.3 million subscribers and delivered its 1 billionth video in February.

Microsoft board of directors

Bill Gates: Chairman

Steve Ballmer: Chief executive of Microsoft

James Cash: Former professor at Harvard Business School

Dina Dublon: Former chief financial officer of JPMorgan Chase

Raymond Gilmartin: Former chairman, president and CEO of Merck

Reed Hastings: CEO of Netflix

David Marquardt: General partner of August Capital

Charles Noski: Former vice chairman of AT&T

Helmut Panke: Former chairman of BMW

Jon Shirley: Former president and chief operating officer of Microsoft

The Los Gatos, Calif.-based company has more than 1,300 employees and operates distribution centers in Tacoma, Spokane and 41 other locations nationwide.

Netflix employs about three dozen people in Washington, a spokesman said.

Hastings was not available for an interview.

Laura DiDio, an analyst with the Yankee Group, said Hastings looks like a good fit with Microsoft.

"He's an entrepreneur and an innovator. He gives back to the community and plus he's got the fancy degrees," she said. "You don't get much better than a master's in computer science from Stanford."

Hastings' expertise also "shows where they're going," DiDio said of Microsoft.

Netflix has lately been pushing into digital delivery of videos, a competitive, emerging market where Microsoft already has a foothold with its Xbox Live video-downloading service.

Other competitors include Apple's iTunes and Amazon.com's Unbox.

Netflix is phasing in a service that streams video on demand onto customer PCs. Hastings announced the move in January at the National Retail Federation's Annual Convention & Expo, where he was named Retail Innovator of the Year.

Hastings joining the board raised tantalizing possibilities for some Microsoft observers. If Microsoft struck a deal to provide Netflix' catalog over Xbox Live, for example, that would be a huge boon, said Matt Rosoff, an analyst at Kirkland-based Directions on Microsoft.

"You have to be a little bit careful trying to read too much into board appointments ... but there's a lot of potential," he said.

A Microsoft spokesperson said in an e-mail, "There are no additional business arrangements as part of Reed's addition" to the board.

Asked whether Microsoft's board, which now consists of nine men and one woman, was concerned about replacing female director Korologos with a man, the spokesperson said diversity is a consideration in recruiting directors.

"The board looks hard at a number of factors in selecting a board member, and selects the best candidate for the position, given the needs of the board at that time," the spokesperson said, adding that the criteria include a deep background in business disciplines relevant to the success of a large, public company; understanding of Microsoft's business and technology; a strong educational and professional background; and personal achievement.

Hastings, who will serve on the board's finance committee, will be paid the regular non-employee retainer of $200,000 a year, 60 percent of which is in the form of a stock award.

Benjamin J. Romano: 206-464-2149 or bromano@seattletimes.com

$1.5 million grant to Carnegie Mellon

Microsoft will donate $1.5 million to Carnegie Mellon University to create a computer-science research center.

The Pittsburgh-based university will establish the Microsoft Carnegie Mellon Center for Computational Thinking.

The money will be given over three years, Microsoft said Monday.

The center is the eighth that Microsoft's research arm has created.

Bloomberg News