Everyone is enamoured with the “content business”, even though it makes relatively low profit. Netflix’s profit is in the low hundreds of millions, even though it takes in about 10B in revenue. Apple makes more profit in a few days than Netflix does in a year. Sure, services are a growing part of Apple’s total revenue pie, but that is spread across multiple streams. Not worth paying 200+ x earnings.
Growing organically, with small acquisitions, is the best content strategy for Apple.
If Apple is itching to spend it's horde of cash on infrastructure, it should consider a delivery system of it's content. The world is increasingly dependent on fewer and fewer ISPs and telecommunications companies to deliver content to customers. Having the rights to all the content in the world means nothing if you can't deliver it. Buy T-Moble and/or Sprint, fix them and assure some sort of delivery system. Apple has already helped to back themselves into this corner slowly but surely. As iTunes started selling music and video, digital copy rights became stronger, then CD/DVD burners/players started to disappear from their computers. More and more, I think the end goal being the only way to get things on a computer is wirelessly. As Net Neutrality fades, telecoms will jack up their prices, block competing content suppliers and start holding consumers and content providers hostage.
I also don't think that Apple would help Netflix in anyway, Apple is to squeamish about creative content, they would censor too much and try to create another Disney. That would be a massive failure. For all the rules that app developers have to constrain their apps to, to please Apple, I don't see tv and movie producers following orders from Apple.
Apple won't repatriate a penny. Why would they want to waste that $47B to uncle Sam? They'd rather buy corporate bonds and invest it in US securities.
Apple will have to pay the taxes on those as-yet unremitted foreign earnings whether it actually repatriates them (i.e. the foreign subsidiaries distribute them to the parent domestic company) or not. Under the new tax law, for federal income tax purposes, they'll be deemed repatriated.
And Apple's tax bill on those as-yet unremitted foreign earnings won't be $47 billion. It will be considerably less.
Apple won't repatriate a penny. Why would they want to waste that $47B to uncle Sam? They'd rather buy corporate bonds and invest it in US securities.
Apple has already set aside (accounted for in their earnings over the years) a substantial amount for US taxes on the foreign cash. So there would be little impact on profits in bringing the cash home. At 15%, the repatriation tax on 200B brought home would only be 30B. I think they have set aside about $25B already.
Apple can’t continue to increase debt for buybacks indefinitely. They should bring the cash back to US. Going forward it has to be paid every year anyways.
Please. Apple is not buying Netflix. Netflix has A LOT of long term debt issues.
Thats over estimated ( and yes I am an investor). Long term debt obligations are about 4B, but analysts also cost as liablities their future content deals. Most broadcasters have these, but they are not generally added to long term debt by analysts.
I'd be buzzing if they did, but I highly doubt it, think it could be one of their best ever purchases but would also create a lot of drama from people who hate Apple, which would be great to see, laughing at the 40% prediction though..
Netflix is 10s of billions of Dollars in debt. The quality of its original programming (The Crown excepted...excellent show!) is dropping and other streaming services of late seem to be doing more interesting things. Not currently a great buy for Apple IMO.
They're rumoured to be in $20 Billion of debt, I personally think a good 80% of the original content is good, many others do as well thats why they're spending so much on it, and yes The Crown is excellent! Netflix is still by far the most popular streaming service out there.
Comments
Growing organically, with small acquisitions, is the best content strategy for Apple.
If Apple is itching to spend it's horde of cash on infrastructure, it should consider a delivery system of it's content. The world is increasingly dependent on fewer and fewer ISPs and telecommunications companies to deliver content to customers. Having the rights to all the content in the world means nothing if you can't deliver it. Buy T-Moble and/or Sprint, fix them and assure some sort of delivery system. Apple has already helped to back themselves into this corner slowly but surely. As iTunes started selling music and video, digital copy rights became stronger, then CD/DVD burners/players started to disappear from their computers. More and more, I think the end goal being the only way to get things on a computer is wirelessly. As Net Neutrality fades, telecoms will jack up their prices, block competing content suppliers and start holding consumers and content providers hostage.
I also don't think that Apple would help Netflix in anyway, Apple is to squeamish about creative content, they would censor too much and try to create another Disney. That would be a massive failure. For all the rules that app developers have to constrain their apps to, to please Apple, I don't see tv and movie producers following orders from Apple.
And Apple's tax bill on those as-yet unremitted foreign earnings won't be $47 billion. It will be considerably less.
Apple can’t continue to increase debt for buybacks indefinitely. They should bring the cash back to US. Going forward it has to be paid every year anyways.