Netflix shares were up Thursday after the Financial Times claimed that Apple has expressed interest in purchasing a media company. In late 2015, in a meeting between Eddy Cue and Olaf Olafsson, the former raised the possibility of bidding for Time Warner, the report said.
Does an Apple and Netflix combination make sense?
The Financial Times learned from bankers that instead of pursuing a pure content player, Apple is more inclined towards pursuing a streaming company such as Netflix. Making such a move would help the iPhone maker offer a wide range of content from different producers. Cue oversees the iTunes store, iCloud and Apple Music, while Olafsson is the head of corporate strategy at Time Warner.
Whether Apple will pursue any deal or not is not clear for now, but there is reportedly a variety of potential media targets that the company has been considering.
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Jim Cramer, The Street’s Action Alerts Plus Portfolio Manager, says, “There were no real talks is what I understand. It’s interesting to speculate. HBO is what Time Warner has that Apple would want … people would say, listen [Apple] is not a one-trick-pony handheld… So it makes sense, but just because it makes sense doesn’t mean it’s going to happen,” Cramer adds.
For a long time, Cramer has advocated Apple buying Netflix, and if he had been doing the deal, he would keep Reed Hastings as CEO of Netflix. The expert also thinks that HBO would be great for the company, and therefore, he considers Time Warner a great match for Apple.
Not good enough to get bullish
This, however, is not a good enough reason to buy the stocks. Anyone who bought either Netflix or Time Warner when their stocks were “running off the unfounded takeover rumors, you need to get your head checked and call a time out. You need to cool off. Go get an ice cream or something,” Cramer said.
Cramer classifies this as the textbook definition of sloppiness. Another example of sloppiness was with trading oil. When crude oil gets to $50 a barrel, it will run likely run out of steam, Cramer has reportedly warned investors since crude was in the $30 range. He explains that $50 is the golden price where many cash-strapped oil companies will be able to sell oil futures for a profit and bring in the additional income needed for paying the banks.
On Thursday, Netflix shares closed up 2.60% at $102.81.