Among the biggest losers in Tuesday’s early trading are Netflix (Nasdaq: NFLX) and Orbitz (NYSE: OWW).

The bad news keeps coming for DVD-by-mail pioneer Netflix. Rival Amazon.com (Nasdaq: AMZN) has lined up an agreement with Epix, a consortium of major movie studios, to again access to many of the same film titles to which Netflix used to have exclusive access. Shares are off roughly 10% today, officially disgorging all of the gains seen after shares soared in 2010 and 2011.

Netflix’s decision to rapidly embrace streaming at the expense of its core mail delivery business still stands as one of the oddest moves ever taken by a fast-growing company. As I wrote in this article back in April, “The DVD-by-mail business has huge barriers to entry. The streaming business does not.”

At this point, Netflix is on a course for commoditization. Within a few quarters, at least three major players will host very similar streaming platforms (Netflix, Amazon and Coinstar’s (Nasdaq: CSTR) Redbox)) and in a few years time, companies like Comcast (Nasdaq: CMCSA) and DirecTV (NYSE: DTV) might join the fray. 

The solution for Netflix is painfully simple — and highly unlikely: Take advantage of an existing impressive array of distribution centers and emphasize the unique virtues of the DVD-by-mail platform and de-emphasize the increasingly commoditized video streaming business. Benefits include a much deeper inventory thanks to less restrictive licensing agreements than streaming, and higher gross margins from the DVD-by-mail customer. 

Orbitz’s cash crunch

Are investors anticipating a major balance sheet blow up for travel website operator Orbitz? It’s unclear why shares are off roughly 10% today (and off nearly 40% since the end of July), but any time you see a stock slip below $3, your first look should be at the balance sheet.

Once there, you’ll find that Orbitz has $170 million in cash against $750 million in debt. Here’s the rub: $336 million in that debt is classified as short-term, meaning it comes due in 12 months or less. Orbitz must either raise fresh cash or re-finance that debt to keep the lenders at bay.

Orbitz is already an also-ran in a crowded field, and now Google (Nasdaq: GOOG) is set to create more noise. Recent acquisitions of Frommers and various travel search engine software sites imply that Google has plans to become a dominant player in travel search and booking. That’s potentially unpleasant news for firms like Priceline.com (Nasdaq: PCLN) and Expedia (Nasdaq: EXPE), but perhaps devastating news for Orbitz, which simply lacks the resources to fight this battle. 

For investors that like to find “terminal shorts,” or stocks that can go to zero, Orbitz should pop onto your radar. 

Action to Take –> Both of these companies are hurting, though Netflix is bound to find support somewhere near these new lows, as there are still a lot of bullish analysts that will pound the table for this stock. Orbitz, on the other hand, looks to have much more downside. The stock may not necessarily become a terminal short if a potential buyer snaps up the website. But with roughly $500 million in net debt to be paid off, it’s not clear how much cash would be left over for shareholders anyway.