Tuesday, March 07, 2017

Apple Inc. (AAPL) Can’t Commit to Hollywood

Investors have heard it all before, so don't expect AAPL to react much

Rumors abounded last week as two executives from Apple Inc. (NASDAQ:AAPL) were involved in a series of closed-door discussions in Hollywood, involving some high-ranking TV and film producers.

While few details of those meetings have been made public, journalists and analysts alike have speculated about a range of possibilities, including everything from a massive effort to make Apple TV a legitimate player in the streaming arena, to acquisition and partnership negotiations.

Eddy Cue, Apple’s Senior Vice President of Internet Software and Services, held meetings last week with executives from various film studios, including Sony Pictures Entertainment, the cinema division of Sony Corp (ADR) (NYSE:SNE), and Paramount Pictures Corporation, a subsidiary of Viacom, Inc. (NASDAQ:VIAB).

Apple’s Endeavors in Hollywood Are Unclear


Because last week’s meetings between Cue and film studio execs remain under wraps, the rumors regarding Apple’s future in the movie business are just speculation at this point. But those guesses aren’t mere shots in the dark, though, and many analysts have been taking cues from Apple’s previous industry activity.

For instance, the Financial Times reported last month that Apple “has considered a range of acquisitions and targets including, most recently, Imagine Entertainment.” That deal ultimately fell through, however, leaving Apple still waiting in the wings for a suitable cinematic opportunity.

Some speculated that Apple was considering an outright acquisition of Netflix, Inc. (NASDAQ:NFLX), but the outlay that would have been required was seemingly too great to even consider.

But Apple isn’t entirely absent from the television arena, as the company has plans underway to produce “an abundance of original TV content exclusively for Apple TV, expected to debut this year.” Plus, the company is reportedly attempting to create a hybrid service that ties together Apple Music and Apple TV, though many analysts are concerned that such a service would not perform well in today’s entertainment marketplace.

PatentlyApple opined, “The market is going to be so saturated with new TV services that Apple will have to do something rather dramatic for their new hybrid service to stand out,” but “Apple TV’s greatness has always been ‘just around the corner’ and has never really materialized.”

What’s confusing to some AAPL stock investors, though, is Apple’s seemingly mixed signals regarding the company’s intentions for the streaming movie and television space. One one hand, Senior VP Cue has clearly stated, “We’re not trying to compete with Netflix or compete with Comcast.”

CEO Tim Cook purportedly verified the company’s current lack of direction, stating:
“In terms of original content, we’ve put our toe in the water doing some original content for Apple Music, and that will be rolling out throughout the year. We’re learning from that and we’ll go from there.”
However, considering both last week’s meetings with top Hollywood film studio executives and the failed takeover negotiations with Imagine Entertainment, it certainly does look like Apple is trying its hardest to break into the streaming media niche. In fact, longtime Apple stock analyst Gene Munster predicted that Apple will win an Oscar within the next five years.

What This Means for AAPL Stock


All things considered, with the current state of affairs regarding Apple TV, original content production and Hollywood film studio acquisitions, there hasn’t been much that’s legitimately concrete.

Sure, if we were talking about any other company, this myriad of rumors and speculation combined with executive statements to the contrary could be enough to cause some wild swings in stock prices. But, for AAPL stock, this doesn’t even move the needle.

The company has so many other revenue streams and products on which to focus that its film and TV floundering have basically gone unnoticed. Apple stock investors have been hearing about the upcoming Apple TV revolution for years, but nothing has materialized.

This current buzz of activity may have caught the attention of some, but until — or unless — management officially announces something groundbreaking, AAPL stock will remain unaffected.

Article originally appeared on InvestorPlace (03/07/2017)