AT&T upgraded to outperform from market perform at Raymond James

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Apple should consider a big M&A deal to catch up on rivals in streaming: Wedbush analyst

Apple Inc. should consider doing a big, strategic merger or acquisition to help it catch up on rivals including Netflix Inc. and Amazon.com Inc. in creating content for its coming video streaming service, Wedbush said Tuesday. “While acquisitions have not been in Apple’s core DNA, the clock has struck midnight for Cupertino in our opinion and building content organically is a slow and arduous path, which highlights the clear need for Apple to do larger, strategic M&A (a24, Lionsgate, Sony Pictures, CBS/Viacom, Netflix, MGM) around content over the coming year to “double down” and drive the services flywheel especially with its new video subscription service set to be rolled out,” analyst Daniel Ives said in a note to clients. Apple has announced a March 25 event at the Steve Jobs Theater in Cupertino, its headquarters, to announce details of the streaming service, which is not expected to launch until the fall. Ives is hoping the company is planning to use the service to further expand its entire services offering into areas such as video content and even gaming in the next decade. Services remains “the wild card in driving the valuation higher for Apple,” he said, estimating that part of its business is wroth about $400 billion on a standalone basis. The streaming segment could be worth more than $50 billion in revenue by fiscal 2020, doubling from fiscal 2016 levels, he wrote. Apple is spending about $1 billion on content this year, but is still playing from behind in the content race with Netflix, Amazon, Disney and AT&T/Time Warner , he said. Apple shares were slightly higher premarket, but are down 1.6% in the last 12 months, while the Dow Jones Industrial Average has gained 1.9% and the S&P 500 is flat.

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