Is Apple Buying Netflix? Here’s Why You Can Ignore Some Analyst Predictions

Citi analysts recently sent a note to clients saying there is a 40% chance that Apple AAPL -0.03% will buy Netflix NFLX +1.93%, according to Business Insider. This will no doubt garner headlines and will be discussed ad nauseam on the financial news networks.

The basis for the analyst’s argument is that Apple will have $252 billion in overseas cash available to repatriate, and they need to do something with it. It would be boring and obvious to tell their clients that Apple will stay the course and continue what they’ve been doing — making smaller acquisitions (like last month’s purchase of Shazam), increasing research & development spending and buying back shares and growing their dividends. It’s much splashier to say they’ll do something exciting like buy Netflix, Walt Disney DIS +0.43%, or Tesla TSLA -1.05%.

Where did Citi come up with their 40% estimate? Did they just pull it out of thin air? Apple is very secretive when it comes to their long-term plans, so this type of analyst note seems to be nothing more than mere speculation.

The Citi analysts have nothing to lose by making their prediction — if they’re wrong, they can claim they said there was a 60% chance of a deal not happening. If they’re right, they can hang their hat on it and say they were the ones who made the call that it would happen.

Apple has already committed $1 billion towards creating new shows and their largest acquisition was buying Beats for $3 billion in 2014. Why would they spend $75 billion to buy Netflix? It would be a desperation move that would raise a white flag and signal a major organizational shift in philosophy.

Where did Citi come up with their 40% estimate? Did they just pull it out of thin air? Apple is very secretive when it comes to their long-term plans, so this type of analyst note seems to be nothing more than mere speculation.

Netflix shares will probably get a boost from this (“buy the rumor, sell the news!”), but they are already overvalued and overpriced. Netflix currently has a P/E ratio over 191 and negative free cash flow as it burns through cash developing new content. Competition in the streaming market is heating up considerably after Disney announced plans to pull their content from Netflix and start their own streaming service next year.

Ultimately, it’s highly doubtful that Apple would buy Netflix, especially at such a high premium. Citi probably knows that, but will be happy to have the attention, and their clients who own Netflix shares will be happy from the inevitable bump.

How one small company’s first Chinese order offers inspiration for Brexit

Gary Stevens has bought his first robot. It grinds and polishes brass switches twice as fast as human workers, and more consistently too.

The machine is not replacing people – he is hiring more of them as well, because he has just landed his first order from China and needs to ramp up production.

Companies building upmarket apartments and smart hotels in the world’s second-largest economy want to show off the finest interiors, and that includes the high-end light switches and electrical fittings designed and manufactured in Hastings by Focus SB, where Stevens works.

“We had to design a range from scratch, which is quite an investment. But the reason we did it is because China is a huge market,” he says.

More than 400 hotels are being built in the country, he says, including the MGM Cotai in Macau, an award-winning casino project which is using Focus SB fittings in its ultra-high luxury suites.

Exporting to China is not simple – the firm had to host inspectors from the country to check they met local standards. But now it has the seal of approval, the potential market is open to the company.

Now the biggest challenge is increasing production quickly enough to meet the new demand. Stevens hired five more workers and took on one new site this year, taking his total to more than 60 workers in three locations across the coastal town.

Another five staff will come on board in 2018. Its turnover of £4.5m a year should double over the next three years on the company’s forecasts, which it believes are relatively conservative. This is a big step. More than 90pc of its output historically has gone to the UK market.

Exporting to Europe has always been difficult as different countries have different standards across the EU. A few overseas markets such as UAE and Hong Kong use UK standards for historical reasons and so buy some of the supply.

But, despite this lack of EU sales, it was Brexit that prompted Focus SB to make this difficult new drive into China. “It was sparked off by the spectre of the Brexit vote. Although it wouldn’t directly impact us, we were fearful that the UK construction industry could be affected by Brexit in terms of access to labour,” Stevens says.

“If the UK construction industry slows down, then the market we predominantly supply into becomes more difficult. So that started the whole process.”

This East Sussex success story is a microcosm of the challenges facing the wider British economy. Businesses have spent the past 40 years growing in the knowledge that the UK is part of the EU, and now that is coming to an end on uncertain terms.

Initially, analysts and economists focused on the sectors that would be most badly affected by Brexit, analysing the depth of that impact depending on the type of deal negotiated and implemented over the coming years.

Just this month, Standard and Poor’s, the credit ratings agency, published a report looking at 16 industries and identifying the top three Brexit risks for each sector. Of those 48 risks, just one was positive – that a weaker pound would boost the leisure and hotels industry.

Growth opportunities are gaining more attention as companies seek ways to expand even as the political and regulatory ground beneath them threatens to shift. Financial services is one sector that is typically cited as a big potential loser from Brexit.

Banks, insurers, fund managers and others have come to rely on flows of business, people and capital across borders in the EU. The state of play afterwards is not yet clear and so firms are starting to implement plans to move staff to other EU cities including Dublin, Frankfurt and Paris.

Yet companies are adjusting their plans in a reminder that financial firms have always been flexible, adapting to the environment around them. It is what helped make Britain the world’s pre-eminent financial centre, and the giants of the City do not expect to simply skip the country the moment things change.

Take the London Stock Exchange as an example. It had 106 flotations in 2017, the highest since 2014. That does not give the impression of a firm struggling with Brexit, nor does it look like investors want to leave the UK.

Nikhil Rathi, the LSE’s UK chief executive, says the group is targeting a global audience, noting that British financiers have always adapted to the economic and political environment. His recent travels include India, China and Indonesia, winning business to make sure funds are raised in rupee, renminbi and rupiah in London.

“A big question for us is how to integrate the global emerging markets that are going to be the major source of capital flow and capital stock for the next 30 to 40 years,” Rathi says. “We have always been a global market. We have been building our business in China for years, but the noise around the UK and Brexit certainly means we are even more determined to continue to develop our global footprint.”

He does not expect to lose out even in European business post-Brexit, as investors from across the Channel still need to access Britain’s markets. EU firms need that capital too.

“Why would a European investor who thinks they can make money by investing in the UK market not do that? These are global investors who may also invest in the US, Hong Kong and other global markets as well,” he adds. “You need British, European, American, Asian, Middle Eastern capital – you look at the UK and European economies, the ageing populations, huge investment needs for infrastructure, where is that going to come from? I cannot see a situation where it would make sense for investors who can see attractive opportunities to somehow prevent their capital from flowing to take advantage of those opportunities.”

It is working. Recent listings in London include firms from Ireland, Cyprus and Austria. Beyond the EU, Israeli companies, in particular, appear increasingly keen on the British market – the number setting up in the UK rose by 28pc in 2017, according to think-tank BICOM, and 28 Israeli firms are now listed on the LSE with a market value of £11.5bn.

Certain domestic sectors other than finance are also performing strongly, particularly when serving global growth markets. “We are bullish on the UK aerospace sector,” says Jeremy Leonard at Oxford Economics. “Global demand for air travel is strong. Most of the demand is coming from Asia.”

As a high-value sector requiring specialised skills and kit and benefiting from economies of scale, it is hard to shift overseas too. Leonard anticipates growth of 2pc to 3pc per year over the next five years, which is twice as fast as the wider manufacturing sector. He also cites the creative services sectors as a crucial advantage for Britain, including advertising and marketing, as well as legal and accounting services.

As emerging markets become more advanced, businesses are demanding more of these specialised services. As Britain is a leader, companies here are among the best placed to make the most of this global growth. PwC’s Darren Jukes agrees, adding that services are often “borderagnostic”. He also believes the UK could have an edge in the latest hi-tech sectors where no rival country has yet built a lead.

“The government announced its industrial strategy and the sector deals that are looking to drive investment in artificial intelligence. If you’ve got organisations that can benefit from the use of those applications then potentially the next few years could see growth in opportunities,” he says.

It could even cover the automotive sector, which is largely worried that Brexit will ruin its supply chains by adding tariffs to cross-border trade. “The opportunity lies in organisations that are more focused on the emerging technologies in automotive, whether that is around connectivity, electrification, those types of applications,” Jukes says.

For anyone seeking advice on how to go global, Stevens has a happy story to tell about Chinese buyers. “They look at Britain as a flagship in terms of quality, and they seem to be very British-brand hungry.” he says. “I’m sure there are many opportunities for British manufacturers similar to us in different fields to take advantage of that.”

mfg Solicitors backs Prostate Cancer UK through Go Dad Run donation

KIND-hearted law firm mfg Solicitors has donated £1,000 to Prostate Cancer UK to support the charity’s ongoing research and awareness campaigns.

The donation follows the firm’s backing of Worcestershire businessman Edward Kimpton in the Sanlam Go Dad Run – a 6k run for men and boys which took place earlier this year around Worcester Racecourse.

The law firm supported Mr Kimpton, a chartered wealth planner at Sanlam, who took part in the race for the third time this year alongside his sons.

Helen Gough, a senior associate at mfg Solicitors said: “Raising awareness of prostate cancer is a matter very close to my heart given that I lost my father 12 years ago to the disease.

“We were therefore delighted to support Edward and the charity with our donation this year which will go towards finding a cure and supporting organisations who help to care for those with the disease.

“It means a lot to us to go that extra mile. It’s a tragedy that so many men die needlessly of the disease every year, both as a result of lack of awareness and the fact that simple tests are not done as standard.

Edward Kimpton added: “I am extremely grateful to Helen and the team at mfg Solicitors for not only supporting us, but for such a generous donation to a charity which does so much for so many. The firm has always been strong supporters of the event.”

Mr Kimpton has now raised a total of £2,024.80 over the past three annual events.

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Bina PHOTO

Mother wins discrimination case against global law firm Dentons

A mother has won a sex discrimination case against the world’s largest law firm after they sacked her while she was on maternity leave and shredded the evidence.

Bina Hale, 36, broke down in tears during the employment tribunal as she described the treatment she received from her bosses at Dentons in Milton Keynes.

The former recruitment manager was selected for redundancy during a meeting before she had returned to work.

The employment tribunal was told handwritten bullet points from the discussion had been shredded.

Human resources manager Suzanne Barnes claimed she destroyed the notes because she liked to work in a paperless office.

Mrs Hale’s line manager Emma Rowe was scolded  by the judge after producing a single piece of white paper at the tribunal which she claimed was from the notebook she used to make notes in the meeting.

The hearing was told the pages from the book were actually brown.

The judge blasted the firm for a lack of honesty and credibility. The Times reports he told Ms Rowe: ‘None of this is credible . . . a firm of lawyers ought to know that.’

Speaking after, Mrs Hale said women should not be afraid of confronting discrimination.

‘I strongly urge women who have been subject to similar treatment to seek justice and speak out and stop such employers taking advantage of women at a very vulnerable phase of their lives, regardless of who the employer is. Do not be afraid,’ she told the Times.

A payout will be decided at a future hearing.

Last month the tribunal was told how Mrs Hale started working for the firm in December 2014.

She said she saved the company thousands of pounds by hiring staff directly, rather than through agencies.

Senior partner at Dentons, Andrew Harris, described her work as ‘brilliant’.

Mrs Hale experienced a difficult pregnancy and her mother-in-law was diagnosed with cancer.

She told the hearing she was shouted at over the phone by Emma Rowe, who was head of recruitment at their London office.

Mrs Rowe, HR business partner Suzanne Barnes, and then-practice manager Tina Crawford, marked Ms Hale down on professionalism and said that she was made redundant because she scored the lowest.

Motley PHOTO

Kimberly Motley: The first and only foreign lawyer to practise in Afghanistan

The people she works with range from imprisoned Afghan women to foreign reporters and kidnap and rape victims.

Who’s this legal eagle?

Kimberly Motley, a US attorney. She’s the first and only foreign lawyer to practise in Afghanistan.

How long has she been working in that part of the world?

Ms Motley arrived in 2008 and, eight years later, the former US beauty queen remains the only foreigner with a license to practise in Afghanistan’s courts.

What’s her client base like?

The people she works with range from imprisoned Afghan women in Kabul’s Badam Bagh prison to foreign reporters and kidnap and rape victims.

Has she ever found herself on the wrong side of the law?

The upper echelons of the state aren’t her biggest fans, seemingly. Ms Motley, 38, says she has been “heavily pressured by the Government” to stop working on certain cases.

Why not just go back home?

Ms Motley is committed to defending human rights in the country. She describes herself as “a legal archaeologist,” and immerses herself in Islamic texts to identify passages that might help her clients, particularly women. A line stating “a woman is never to be inherited,” can be interpreted as “a woman must never be forced to marry,” she says.