RBC Raises Price Target on Apple Shortly After Dreaming About Benefits of a Merger With Disney

[IJ Reilly]

They can be if you're over-levering yourself but to say any usage of leverage is dangerous ( I understand even $1 of leverage of riskier than $0) is crazy myopic. You've argued for years on here (along with myself) that Apple's cash position is too large/suboptimal. Well, if you believe that you should realize that optimal capital structures are rarely 100% equity. I'm sorry, but someone who is making $10m per year and chooses to get low-interest financing on a $20k purchase is not dangerous.

I did say, depending on the extent of the debt. In the case we are discussing here, the extent would be extensive.

You are right to remember that I've argued for years that Apple needs to keeps its cash position under better control, but at the same time, I've also argued that huge mergers and acquisitions are not the way to do it. Mergers are inherently risky. Adding debt to them just increases the risk.

 

[ArtOfWarfare]

#2 The parks become a tech demo of future Apple Products especially in areas like Tomorrowland. This was designed to be the future of America TODAY. Right now it's more what American was supposed to look like in 2000 circa 1985 with a hint of random Star Wars. Think of what it could be if Apple used it as a showcase for what future technology could be. This goes quadruple for Epcot center. Similar concept, a utopian city of futuristic ideas. Again, a great place to show off Apple's new and upcoming tech. Sure the parks could be looked upon as a distraction, but I think it could be a great advertising revenue. Plus it could really help the parks as a whole.

This sounds like a horrible idea. If Apple actually shows off future technology at the Epcot Center, they'd end up suffering from the Osborne Effect. Nobody would want to buy Apple's products of today, because they'd know the products of tomorrow. Apple goes to great lengths to keep their products of tomorrow a secret.

Alternatively, they could keep Epcot the way it is, and everyone makes fun of Apple for describing technology from the past as if its in the future.

Mixing Apple and Epcot sounds like a lose lose. There's no way for it to work out. They'd be best off just leveling Epcot and replacing it with a large glass structure and a subterranean Apple store.

 

[drumcat]

That isn't how it works. What are these reserve shares, and how would they be used? Does financing a merger with debt actually sound good to you? Yes, they have more options than a full cash deal (a stock swap being the most obvious), but they also have substantial downsides for stockholders.
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You said cash. I said they had other options. You ASSUMED incorrectly that I thought they were a good idea. I never suggested they *should* do anything.

Financing with debt can have excellent tax consequences.

Reserve shares take one SEC filing.

Again, that IS how it works. The decision is a different matter. But please stop with the misinformation.

 

[satcomer]

PRSI forum? How does this meet that requirement? Does the name Trump auto-trigger said restriction?

Sounds like simple business speculation to me

Looks like stock multination!

 

[IJ Reilly]

You said cash. I said they had other options. You ASSUMED incorrectly that I thought they were a good idea. I never suggested they *should* do anything.

Financing with debt can have excellent tax consequences.

Reserve shares take one SEC filing.

Again, that IS how it works. The decision is a different matter. But please stop with the misinformation.

You haven't provided any information, or answered my question. Maybe that's how it should be done?

 

[LizKat]

Hmm..you were the one that suggested this nonsense. Generally the shareholders don't do well in large acquisitions. I'll give you a classic example.

http://www.economist.com/node/1035824

These things are typically a disaster, even if the merger itself is actually approved. That one was particularly bad, but Apple has done far better by picking up small companies that can be integrated without an excessive quantity of layoffs and undervalued IP.

And then there was the alleged synergy of AOL and Time Warner... worst corporate merger in the history of Wall Street.

My vote on AAPL and Disney? No way.