Sounds entirely like a fabricated story to elevate TW's asking price.
I don't like it. And CNBC didn't spend much time on it this morning. The stock is basically flat this morning so it doesn't seem like Wall Street is taking seriously.
Also, apparently the New York Post is the source of the rumor. The New York Post! LOL!
Why is this so hard to understand? Lets go over the 2 scenerio's
Option 1: No buyback
Apple buys Time Warner for $60 billion in cash/stock Cash flow: Negative $60 billion
Option 2: Buyback
Apple buys back shares for $60 per share Apple pays Time Warner $10 billion in cash and $50 billion in stock when the shares are at $100
Cash Flow: Negative $10 billion in cash. Negative $30 billion in stock. Total is $40 billion negative.
By using the buyback Apple saves $20 billion in cash flow.
This is assuming the stock is $100 when they buy Time Warner. This is assuming Apple bought $50 billion of stock at about $60 per share.
Sog, I would ask you the same. Why is it so hard to understand.? Under your scenario you need Apple to have an asset created with the buyback. They don't. The stock was burned so to speak. It was a total loss, no value remaining. Your Scenario 2 does not exist.
I still don't get why you don't understand that:
Lets say you bought a sandwich for $3 Then you sold it for $5. Would that not be a win?
i don't get how you don't get that selling something for 40% more than you bought it for is not a win.
That's not what Apple did. Apple bought the sandwich for $3 then threw it in the garbage. They can make another sandwich and sell it for $5. Throwing the old one in the garbage didn't make them more profit when selling a freshly made one for $5. One has nothing to do with the other. Now do you get it?
I think most AI readers will understand that so I'm not going to waste more time on explaining it yet again. It's simple common sense. Buying back the car you sold.years ago and then burning it doesn't mean you make anything more when you sell another.
This is exactly what Apple needs to do. They need to diversify their revenue streams so they are not 80% reliant on hardware. They need more revenue from services.
They do. But they don't have to spend $70B on an old media company to do it. It seems to me some are freaking out over iPhone sales and are now in a rush to find Apple new revenue streams. CNBC spent all of one minute on this story this morning. It's not being taken seriously.
Yes cable seems retro now doesn't it? Apple are all about paradigm shifts not holding on to old tech. As Solipsism just joked with me (on another forum) TW being bought by a company beginning with 'A' doesn't work out too well! LOL
Lets say you bought a sandwich for $3 Then you sold it for $5. Would that not be a win?
i don't get how you don't get that selling something for 40% more than you bought it for is not a win.
That's not what Apple did. Apple bought the sandwich for $3 then threw it in the garbage. They can make another sandwich and sell it for $5. Throwing the old one in the garbage didn't make them more profit when selling a freshly made one for $5. One has nothing to do with the other. Now do you get it?
I think most AI readers will understand that so I'm not going to waste more time on explaining it yet again. It's simple common sense. Buying and then burning a Lamborgini doesn't make buying a new one a better value.
You really think buyback is just throwing away money? Remember that stock, like money is a concept. All they are getting rid of, if you want to put it into those terms, is a virtual unit. This strengthens the value of each share, and when done during a natural or manipulated lull of the market, will work for Apple and their investors to a greater degree. This is good business, not psychosis.
I'm not sure I buy this. Apple doesn't know anything about running cable properties. And it's not like Eddy Cue's org is firing on all cylinders. Heck just this week Apple admitted they didn't know how many people were using their news app and were providing inaccurate data to publishers. iTunes needs a lot of work and Apple Music has plenty of its own issues. My concern is too many "analysts" seem to be in a panic of over Apple and silly season is ensuing. So last week Jim Cramer was screaming that Apple needed to buy Fitbit and Harmon and Verifone. Now this week he says Apple needs to create a $199 fitness band with Nike. I hope to god Tim Cook isn't listening to these clowns that are looking for some quick fix because the stock hasn't been doing well.
Yes, Apple knows nothing about running cable properties. And that's exactly why they would buy Time Warner and acquire the talent that knows the TV industry.
That's all good and fine. However, this is not about TimeWarner Cable. TimeWarner Cable/Bright House is in the process of merging with Charter Cable. This merger just received approval from the New York Public Service Commission. No. This report [rumor?] is about the other Time Warner--the media company.
If Apple bought this Time Warner, then it would become a massive content provider. This would put Apple in direct competition with the other content providers that it wants included on its streaming service. This being the case, I don't see how this rumor can be true.
Lets say you bought a sandwich for $3 Then you sold it for $5. Would that not be a win?
i don't get how you don't get that selling something for 40% more than you bought it for is not a win.
That's not what Apple did. Apple bought the sandwich for $3 then threw it in the garbage. They can make another sandwich and sell it for $5. Throwing the old one in the garbage didn't make them more profit when selling a freshly made one for $5. One has nothing to do with the other. Now do you get it?
I think most AI readers will understand that so I'm not going to waste more time on explaining it yet again. It's simple common sense. Buying and then burning a Lamborgini doesn't make buying a new one a better value.
You really think buyback is just throwing away money? Remember that stock, like money is a concept. All they are getting rid of, if you want to put it into those terms, is a virtual unit. This strengthens the value of each share, and when done during a natural or manipulated lull of the market, will work for Apple and their investors to a greater degree. This is good business, not psychosis.
Soli. I would absolutely agree that Apple's intent with the buyback was to raise the overall share value for investors. Your argument is taking this in an entirely different direction, discussing the wisdom of a buyback. I've not opined on whether it was effective or smart to do so. That matters not for the point Sog was making in any event.
The buyback doesn't intrinsically guarantee a new stock share issuance is more valuable than if Apple had never done a buyback to begin with. The two have no direct connection, would you agree? Therefor Sog's argument where he arrives at a definable dollar value (as tho there was an asset created with the buyback) doesn't hold water.
If would be a significant change from their general reliance on hardware as the source of revenue with services as mostly a supporting afterthought.
This is what I've been saying for about two and a half years. Apple needs different revenue streams because the iPhone party will not last forever. And that's a guarantee. I also said that Apple should buy Time Warner so that they have a real foot in the door with television broadcasting and the networks that provide the content. If Apple does this they could be the envy of millions of cable subscribers (I am looking at you Comcast)
Of course when I brought this up 2 and a half years ago all the Apple *fanboys thought it a horrible idea.
I think buying Time Warner Cable is a hell of a lot better idea then Tim Cook giving away Apple's money in stock buybacks. I mean really. Invest in the company instead of trying to appease share holders.
Take some real risk to change the game of Television. Think outside the box on this. Apple cannot continue to rely on hardware.
If Apple did buy the whole enchilada that would put them in an interesting position to provide the data pipes to millions of customers, a boatload of content to serve on those pipes, as well as move a ton of set-top boxes which I would imagine would be an Apple TV-style set top box.
Fun to think about. Not sure how likely it would be in reality though.
If Apple did buy the whole enchilada that would put them in an interesting position to provide the data pipes to millions of customers, a boatload of content to serve on those pipes, as well as move a ton of set-top boxes which I would imagine would be an Apple TV-style set top box.
Fun to think about. Not sure how likely it would be in reality though.
The whole enchilada has not included those pipes for a while now. TimeWarner Cable is a separate company that will soon be folded into Charter Cable.
Ugh. You guys are ready to build a monster. If you want to own something that has the potential to lose money like nothing else a film/TV studio is the way to go. The enormous pressure put on anything they release after the buyout would almost surely be too great. The critics, press and competition would be rooting for apple to lose on this one. Take the amount of negotiations it takes to keep music artists happy and times that by 10 for TV and Movies.
Time Warner is comprised of multiple arms that Apple either has no experience running or no business being a part of. Spreading into a entirely different industry or industries would only create a distraction to what Apples core, and highly profitable, business is. IMHO
Ugh. You guys are ready to build a monster. If you want to own something that has the potential to lose money like nothing else a film/TV studio is the way to go. The enormous pressure put on anything they release after the buyout would almost surely be too great. The critics, press and competition would be rooting for apple to lose on this one. Take the amount of negotiations it takes to keep music artists happy and times that by 10 for TV and Movies.
Time Warner is comprised of multiple arms that Apple either has no experience running or no business being a part of. Spreading into a entirely different industry or industries would only create a distraction to what Apples core, and highly profitable, business is. IMHO
Agreed. If this was just buying, say, HBO I could maybe see it, though I still think it's a mistake for Apple to become content creators. But Apple owning movie studios, DC Comics and cable channels like CNN? Ok I'm sorry but that's nuts.
Apple can issue new shares without buying a single share back. The buyback isn't saving them anything is it? There's no connection between the two AFAIK, tho you still are trying to attach one. Burning the stock they bought back doesn't make a new stock issue anymore of a positive cash flow.
Buying back stock is a strategy which usually increases the value of the stock. I would imagine many investors bought AAPL because of this program. Apple is not likely to reverse their buy back policy and issue new shares, as that would dilute the outstanding shares, which is the exact opposite of their current strategy.
When a company buys back shares, they can do one of basically two things. They can keep them and later reissue them or give them to employees, etc. Or, they can cancel them, as in retire them. When the shares are retired the SEC will delete the serial numbers of the shares so they cannot be used again. This reduces the chance of fraud. This is what Apple is doing in their buy back. They are canceling the shares
Let's get the rumor as true. Is not getting the movie/TV show streaming industry fragmented? Compare it with music, the usual example, you can use Apple Music or Spotify or whatever, but you can virtually access the same content on all them, so you don't have to had Apple Music if you want to hear one artist or Spotify or Pandora for others, all them, with little exceptions are in all platforms.
Now look at streaming, Netflix has its own content that, if available worldwide, is only available for Netflix subscribers, and Hulu also has its own content, ditto for Amazon. So in music you get the streaming service you want without worrying what you can get, but in streaming tv you need to subscribe different services to get all the content. That is expensive and, in the end, will not work. Apple can have a big bunch of content buying Time Warner, but increase the fragmentation. What we need is a service that includes ALL content, distributed worldwide the same day at a flat rate. That's what people want. Only if Apple buys to use the content as a way to secure other streaming or media companies content to them, so you let me stream the same day, say House of Cards, and I let you stream the same day Game of Thrones, there can be something similar to a "game changer" from the user point of view. And that the best streaming experience wins.
I don't think a single investor bought Apple shares because of the buyback.
I'm sure you have your finger on pulse of every one of the millions of AAPL investors. Personally, I think there are plenty of the people who follow Carl Icahn's investing advice. He was instrumental in Apple's decision to start the buy back program and also to raise the buy back target.
regardless. I doubt any investor said to himself, "oh wow. Apple is buying back stock. That makes it a buy."
Regardless, Cook said they were, splitting the share price, doing a buy back and paying a dividend, all to benefit the shareholder. Why would he suddenly reverse course and issue more shares? I think they will stay the course. I could see them structuring some more corporate bonds if they wanted to buy a company. Debt is cheap right now. Better to not mess with the shares. Wall Street is too unpredictable. You should know as I remind you that the share price did not hit $150 in 2015 as you so boldly predicted.
Apple needs to buy Time Warner. It will only cost about $60 billion. Right now Time Warner makes about $4 billion in profit a year.
Apple could pay $10 billion in cash and the rest could be Apple stock that they bought back. That's right. Apple could reissue $50 billion in Apple stock which they bought for under $100 a couple of years ago. Apple bought back $50 billion in stock at $60-$70 a share in 2013.
IMO, this is the real power of the buyback. Buy the stock for cheap in 2013 for $60 a share. Then when the stock is $100, reissue the shares to acquire another company.
Isn't the stock Apple "bought back" retired, not available to reissue?
Comments
I think most AI readers will understand that so I'm not going to waste more time on explaining it yet again. It's simple common sense. Buying back the car you sold.years ago and then burning it doesn't mean you make anything more when you sell another.
If Apple bought this Time Warner, then it would become a massive content provider. This would put Apple in direct competition with the other content providers that it wants included on its streaming service. This being the case, I don't see how this rumor can be true.
Time Warner was formed in 1990 through the merger of Time Inc. and Warner Communications. The current company consists largely of the assets of the former Warner Communications, as well as HBO (a Time Inc. subsidiary prior to the Warner merger) and the assets of Turner Broadcasting (acquired in 1996). Time Warner currently has major operations in film and television, with a limited amount of publishing operations. Among its assets are New Line Cinema, HBO, Turner Broadcasting System, The CW Television Network, Warner Bros., Cartoon Network, Boomerang, Adult Swim, CNN, DC Comics, Warner Bros. Animation, Cartoon Network Studios, Hanna-Barbera, Esporte Interativo, Castle Rock Entertainment and NetherRealm Studios.
The buyback doesn't intrinsically guarantee a new stock share issuance is more valuable than if Apple had never done a buyback to begin with. The two have no direct connection, would you agree? Therefor Sog's argument where he arrives at a definable dollar value (as tho there was an asset created with the buyback) doesn't hold water.
Fun to think about. Not sure how likely it would be in reality though.
Time Warner is comprised of multiple arms that Apple either has no experience running or no business being a part of. Spreading into a entirely different industry or industries would only create a distraction to what Apples core, and highly profitable, business is. IMHO
When a company buys back shares, they can do one of basically two things. They can keep them and later reissue them or give them to employees, etc. Or, they can cancel them, as in retire them. When the shares are retired the SEC will delete the serial numbers of the shares so they cannot be used again. This reduces the chance of fraud. This is what Apple is doing in their buy back. They are canceling the shares
Now look at streaming, Netflix has its own content that, if available worldwide, is only available for Netflix subscribers, and Hulu also has its own content, ditto for Amazon. So in music you get the streaming service you want without worrying what you can get, but in streaming tv you need to subscribe different services to get all the content. That is expensive and, in the end, will not work. Apple can have a big bunch of content buying Time Warner, but increase the fragmentation. What we need is a service that includes ALL content, distributed worldwide the same day at a flat rate. That's what people want. Only if Apple buys to use the content as a way to secure other streaming or media companies content to them, so you let me stream the same day, say House of Cards, and I let you stream the same day Game of Thrones, there can be something similar to a "game changer" from the user point of view. And that the best streaming experience wins.