Saturday, July 29, 2017

Apple will not buy Disney at the moment, for these reasons


The rumors of Apple's purchase of other companies are always on the agenda. Tesla, Disney , Warner, are just some of the companies that are rumored every two by three. Today I wanted to analyze why I think that Apple will never buy a company like Disney , I hope you like it.

Apple's money abroad is a lot but it is not convenient to repatriate it

Surely Apple can buy many companies inside and outside the US for the large amount of cash available. This excuse has always been used to rumor in possible major purchases by the executives of Cupertino, however it is still impossible. It seems that the government of Donald Trump could make this fact a little more real, why? You'll be wondering.
Apple test technology 5G
Apple Company Logo
Until the arrival of Donald Trump to the presidency of the United States, the law that rates the money repatriated in the United States stood at 40%. However and although the toll to return the money to American territory may seem expensive, the operation would still be viable for Apple ... or maybe not.
Although Donald J. Trump has mentioned this matter on a multitude of occasions and guaranteed to lower the rate to 10% , they may have to recuse soon. According to multiple estimates, the US government could enter up to 148 billion dollars over the next decade with such a tax cut, some analysts believe that the US economy would be stimulated by encouraging domestic investment, although they warn of the increase in debt By the lowering of taxes, so it is possible that this lower tax is not effective for a long time.

More problems for foreign money

While it is true that Apple has assets of more than $ 200 billion , it only has cash of $ 16 billion. Where is the rest of the money? Easy response, reversed and retained. Apple invests the rest of the money in the medium term to generate interest. It is estimated that about 90% of that $ 200 billion is outside the United States.
Apple Money Abroad
Most of Apple's fortune is abroad
If you thought everything ends there, you're wrong. You always have to assess the cost of a large operation such as the purchase of Disney or Tesla. They are big companies (Disney's current market is about 180 billion dollars). In order to acquire a company of this caliber, those of Cupertino would have to offer a price for the actions of the current investors of Disney. A cost that would be higher than the price per share of the company. Which would mean spending virtually all of Apple's savings on one purchase. Some savings that we will not forget is not 100% available.
It seems impossible for a manager like Tim Cook who is characterized by stepping on safe ground to buy a company of this caliber, more when Apple's biggest purchase was in 2014 by Beats' signature, an operation that $ 3 billion.

Apple seeks its territory, not the territory of others

If an operation like the purchase of Disney or Tesla takes place is because Apple tries to look for something that does not have or has not been able to implement in its ecosystem . The purchase of Disney for example, would suppose a greater portfolio of contents for Apple, something that needs of urgently way . However, at the moment they prefer to try to find the cheapest way, to draw their own content and to wait for the evolution of the same in the terrain that they are trying to enter.
Pixar Toy Story
Pixar Toy Story
However, few people stop to think that companies like Disney and Apple are completely different things. Both companies are real "sharks" in their respective industries. Many may point out that being such large companies it is best to come together and create a real competition to be able to compete with other options like Netflix. However, we are facing different cultures and processes, looking for growth expectations (more money) in a different way. You can only be a big company if you kill the small ones, the moment someone gets you, you become the little ones and both Apple and Disney, Tesla or other companies know it. Such a merger provokes an identity crisis such as AOL is experiencing with the purchase of TimeWarner , in short, a disaster.
We speak of different concepts and philosophies, while one looks for audience, fill cinemas, theaters and sell merchandising. Others seek to devise devices with ideas that make enjoy and justify payment for these products. Some steps between the two may seem the same (creativity and the need to reinvent) however, there are many other aspects and paths for both of which are different. I speak of corporate culture.

When water and oil are not compatible neither stirring the mixture

If the ultimate goal is to fight against Netflix or other similar audiovisual content companies, it is best to buy from Netflix itself. Disney does not have a material similar to that of Netflix so we speak of very different cases, that Disney knows how to do a certain job does not mean that he knows how to do similar jobs. In my opinion, it is better that Apple use its money to add augmented reality companies, artificial intelligence or just buy competing companies to get them out of the market (Disney already did the same with Pixar).
WatchOS WWDC 2017
New spheres in watchOS 4
At the time, Steve Jobs bought Pixar, remember that it was a division of LucasFilm back in the 80's. The one that was an animation technology firm gradually became a movie studio. While it is true that Jobs was out of Apple, he could have rejected Disney's offer and expect a merger with Apple, but why did not he ?. The founder of Apple knew that two cultures like Apple or Pixar were simply incompatible , so this kind of rumors are meaningless. I think before we will see a possible merger between Apple and Tesla (I am convinced that will not happen) that a purchase of Disney. Some things are better left apart for the sake of both.
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