NYT : Rethinking Apple’s Recipe for Success

Rethinking Apple’s Recipe for Success

For Apple, saying “no” may be getting harder.

Eddy Cue, an executive in charge of iTunes and Internet services for the technology giant, raised the possibility of a bid for Time Warner at a meeting with the media conglomerate last year, according to The Financial Times. That seems at odds with the recipe for success championed by Steve Jobs, Apple’s founder: Reject “1,000 ideas” and focus on only the few excellent ones. An aging iPhone, a tepid stock price and a pile of idle cash, however, could make even a mediocre idea look awfully tempting.

The deal talk never went beyond a preliminary stage or involved Apple’s chief executive, Tim Cook. Making more movies, television shows and other content available on, say, iPads might help strengthen the device’s popularity and sales. It’s unclear, though, why owning content – not to mention acquiring it by paying perhaps $75 billion for Time Warner, including a control premium – would make more sense than just agreeing to distribute it. Apple’s resources are better spent creating compelling devices, not trying to develop a sequel to “Game of Thrones.”

The company has been phenomenally successful sticking to Mr. Jobs’s mantra of minimalism. There is growing pressure, though, for something new.

Producing beautiful cutting-edge technology is, in some cases, turning into a business of churning out commodities. About 1.4 billion smartphones were sold worldwide last year, so it’s harder to find new customers willing to spend hundreds of dollars extra for an iPhone, no matter how elegant its design. Investors seem to recognize that. Apple’s stock trades at a roughly 30 percent discount to the Standard & Poor’s 500-stock index.

The company’s financial strength also feeds an urge for change. Its net cash exceeds $150 billion, and its free cash flow should easily surpass $50 billion this year. That makes almost any acquisition easier to rationalize.

Apple is well known for resisting any impulse to splurge on second-rate ideas. It’s tough to imagine one of its top executives even discussing the purchase of a tangentially related company like Time Warner. Yet the news about Mr. Cue suggests a shift. Apple’s best hope may be that Mr. Cook stands firm on his predecessor’s sage advice.

>>> Philips Lighting prices IPO at €20 a share

Philips Lighting prices IPO at €20 a share

Philips Lighting said on Thursday that it has priced its initial public offering at €20 a share, which would give the Dutch group a market value of €3bn.


The company – the lighting division of electronics giant Royal Philips – said it anticipates proceeds of €750m from the offering.

“I am pleased with the response of investors towards Philips Lighting and the successful pricing of the IPO. This strategic milestone will allow Royal Philips to focus on the fast‐growing health technology market,” said Frans van Houten, chief executive of Royal Philips.

Philips Lighting said the IPO was “multiple times oversubscribed” and that it garnered” strong demand from both institutional and retail investors.

The news comes as the latest sign of life in the listing market, which all but froze earlier in 2016 as tumult across global financial markets kept companies on both sides of the Atlantic on the sidelines. In fact, US Foods rallied 8 per cent in its public debut in New York on Thursday following what was one of the biggest deals of the year.

Philips Lighting said it expects trading to begin on Euronext in Amsterdam on Friday.

>>> BMW CEO poised to shake up top team - report - Reuters News

BMW CEO poised to shake up top team - report - Reuters News

26-MAY-2016 16:03:49
BERLIN, May 26 (Reuters) - BMW BMWG.DE plans to appoint new finance and purchasing chiefs as Chief Executive Harald Krueger builds a younger management team to lead the German carmaker into the future, a monthly magazine reported on Thursday.

Krueger, a 50-year-old who took over a year ago from Norbert Reithofer, wants to replace finance chief Friedrich Eichiner with Nicolas Peter, unidentified company sources told Germany's Manager Magazin.

BMW declined to comment.

Krueger also wants to install a new purchasing chief and other executive changes are possible, with the supervisory board due to decide by the end of the summer, the magazine said.

Earlier this month, BMW reported lower quarterly operating profit, hit by adverse currency moves and pressure on the prices of limousines as drivers in the United States in particular switch to sport-utility vehicles (SUVs).

Peter, 54, is currently head of sales in Europe. Eichiner will turn 62 shortly before the 2017 annual shareholders meeting. He had already extended his contract beyond the firm's usual age limit of 60 for management board executives.

Purchasing head Klaus Draeger, 59, is also leaving due to his age, but a decision has not yet been taken on his successor, although a favourite is Markus Duesmann, the magazine said.

>>> US Gapping down

Gapping down
In reaction to disappointing earnings/guidance: TDW -21.3%, PSTG -17.7%, ANF -11%, NTAP -7.4%, CHS -5.2%, PLKI -4.2%, RUBI -3.9%, IGLD -3.4%, UHAL -3.4%, BLOX -2.9%, DEST -2.3%, MOV -1.9%, DDC -0.7%

M&A news: ASX -2.5% (Advanced Semi and Siliconware Precision Industries (SPIL) agree to promote plans for the establishment of a holding company)


Other news: PRGN -44.7% (receives notice of non-compliance due to equity being below $2.5 mln, co has 45 days to submit plan to regain compliance), OVAS -24% (prices 7.150 mln share public offering at $7.00/share), ALDX -10% (commences common stock offering), WBMD -4.4% (to offer $300 mln convertible notes due 2023 in a private placement), RUBI -3.9% (CFO Todd Tappin to pursue other opportunities, effective immediately)

Analyst comments: N/A

>>> US Gapping up

Gapping up
In reaction to strong earnings/guidance: LGF +13.9%, PVH +7.4%, DLTR +7.3%, BURL +6.1%, IGT +5.4%, CPRT +5.3%, DG +4.6%, WSM +3.6%, TLYS +3.5%, MIXT +3%, HEI +1.7%, TSL +1.7%, SIG +1.5%, COST +1.4%, SAFM +1%, GES +0.9%, HPQ +0.8%, MOD +0.8%

M&A news: SPIL +14.4% (Advanced Semi (ASX) and Siliconware Precision Industries (SPIL) agree to promote plans for the establishment of a holding company)


Select metals/mining stocks trading higher: MT +9.3%, X +6%, CLF +5.2%, FCX +3.2%, AUY +2.3%, VALE +2.2%, SBGL +2%, AU +2%, BHP +1.8%, AA +1.5%, GOLD +1%, ABX +0.9%,

Select oil/gas related names showing strength: CHK +6%, PEIX +4.8%, BCEI +4.6%, MRO +2.3%, PBR +1.8%

Other news: FLXN +20.1% (receives 'positive' guidance from FDA on new drug application submission for Zilretta), EBIO +11.9% (Boxer Capital discloses 9.96% passive stake), NVET +9.5% (reports positive results from NV-02 Pilot Field Study; NV-02 Pivotal Study plans underway), CEMP +4.3% (announces successful results in the Phase 2 CABP Trial conducted by Japanese partner, FUJIFILM Holdings (FUJIY)), NFLX +3.7% (favorable commentary on Wednesday's Mad Money), TWX +2% (FT report that an Apple (AAPL) executive had proposed the idea last year of buying Time Warner), BABA +2% (rebounding with YHOO), YHOO +1.7% (rebounding with BABA)

Analyst comments: INFY +2.2% (upgraded to Buy from Neutral at Goldman), JACK +1.4% (upgraded to Outperform from Neutral at Robert W. Baird), ADM +1.2% (upgraded to Buy from Neutral at Citigroup), SHPG +1.1% (initiated with a Buy at Stifel), TEAM +0.8% (initiated with an Outperform at Oppenheimer)

>>> US Early premarket gappers

Early premarket gappers

Gapping up: LGF +13.9%, NEPT +13%, EBIO +11.9%, MT +8.4%, PVH +7.1%, PEIX +6.6%, CPRT +5.3%, CLF +5.2%, BCEI +4.9%, BURL +4.7%, CEMP +4.3%, WSM +3.6%, TLYS +3.5%, DG +3.4%, DG +3.4%, X +3.1%, MIXT +3%, BHP +2.4%, CHK +2.3%, FCX +2.2%, SBGL +2%, YHOO +2%, VALE +2%, AU +2%, TWX +1.9%, BABA +1.7%, HEI +1.7%, AUY +1.6%, COST +1.6%, ABX +1.4%, GOLD +1.3%, AA +1.3%, GDX +1.2%, TSL +1.1%, SHPG +1%, MOD +0.8%, APIC +0.7%

Gapping down: PRGN -46.5%, OVAS -25.2%, TDW -23.9%, PSTG -15.6%, ALDX -10%, NTAP -7.4%, PLKI -5.3%, SIG -4.9%, WBMD -4.8%, RUBI -3.9%, RUBI -3.9%, LYG -3.4%, UHAL -3.4%, BLOX -2.9%, SAN -1.6%, CS -1.3%, GES -0.9%, HSBC -0.7%, DDC -0.7%

(Bernstein) maintains positive stance on UPS, FDX

Bernstein maintains positive stance on UPS, FDX 
- Firm notes Amazon's explosive growth and increasing independence from UPS and FDX have investors worried if the market for the national carriers will shrink.
- In a range of scenarios where e-commerce sales grow at 8-12% per year for the next ten years, and Amazon grows at 17-22%, the demand for e-commerce deliveries by the national carriers should still yield a reasonable range of 7-10% growth. 
- Firm thinks it highly likely that the domestic parcel market will remain a GDP + grower for UPS and FDX, front end loaded, and believe that the outsized demand for online retail will present pricing opportunities in the years ahead.

FT : Apple executive proposed bid for Time Warner

Apple executive proposed bid for Time Warner

A top Apple executive raised the prospect of the iPhone maker buying Time Warner at a meeting with the owner of HBO, CNN and Warner Brothers, according to three people who were briefed on it.

Eddy Cue, who oversees critical Apple businesses such as the iTunes store, Apple Music and iCloud, broached the idea of a bid at a meeting at the end of last year with Olaf Olafsson, Time Warner’s head of corporate strategy, the people said.

The meeting at the media group’s Manhattan headquarters had been arranged to discuss other commercial relationships between the two companies, such as the potential inclusion of Time Warner’s cable channels in a future Apple video streaming service.
Discussions about Apple buying Time Warner did not get beyond a preliminary stage and never included Tim Cook, Apple’s chief executive, nor his Time Warner counterpart, Jeff Bewkes, people familiar with the matter said.

Apple and Time Warner declined to comment.

The fact that Apple considered bidding for one of the world’s most prominent media companies — Time Warner has a market capitalisation of almost $60bn — underlines the tech group’s growing desire to offer its own content.
It also points to Apple’s willingness to consider new areas of growth as sales of its key device, the iPhone, enters a phase of slower growth and its cash pile mounts to $216bn.

The company, which earlier this month invested $1bn in Didi Chuxing, Uber’s main competitor in the China, has already begun to produce content. It recently commissioned a video series about the app economy and a scripted series starring and produced by Dr Dre, the hip hop star, for the Apple Music streaming service.

However, these are small steps compared with peers such as Amazon and Netflix, which are spending billions of dollars a year on original series and movies.

Apple intends to ramp up its spending on original content to “several hundred million dollars a year”, according to people familiar with the matter. It has also not ruled out acquiring a media company, a person close to Apple told the Financial Times.

Time Warner would be an obvious fit. The company and Walt Disney are the only leading media players that do not have dual share structures and controlling family shareholders. Comcast, 21st Century Fox, CBS and Viacom are all controlled by founders and their families, potentially making it harder to launch a takeover.

Time Warner also has highly sought-after assets: HBO, which produces Game of Thrones, Silicon Valley and Veep; Warner Bros, Hollywood’s largest producer of films and television shows; and Turner, which owns several cable channels and holds the rights to NBA basketball.
The company received an unsolicited offer from Rupert Murdoch’s 21st Century Fox just two years ago. On the day of the bid, the cash and stock offer valued it at about $86 a share, but Time Warner rejected it. Time Warner shares closed at $73.36 on Wednesday.

It is not clear Apple will revive its interest in Time Warner but bankers say the tech company has recently been considering a range of potential media targets. “They’ve been on the lookout for content assets for several months,” said one that has worked with Apple.

Several bankers said Apple was more likely to go after a streaming company such as Netflix than a pure content player, as it would make it easier for Apple’s services to continue to offer a wide range of content makers.