February 25, 2006

Barron's: Apple Could Buy Disney?

Sometimes, you have to wonder if the business trades have anything resembling sources or financial acumen to provide real insight or scoops. This week, Barron's is suggesting that with Steve Jobs on board as the number one shareholder of Disney (DIS), following Pixar's acquisition, that Disney is ripe for the plucking for an acquisition by Apple (AAPL). Yes, you read that right. The article says that Disney is horribly undervalued, and that Jobs would take the opportunity to "take it out".

Anybody who's followed the world of Apple rumors for longer than say, since the iPod was introduced, can remember this rumor du jour being floated, but in the opposite direction. If it wasn't Disney buying Apple, or Sun (SUNW) buying Apple, it was Larry Ellison (ORCL) buying Apple, or in Michael Dell's (DELL) fantasy world, that Apple would shut down and give their money to the shareholders. Now that the Pixar deal is consummated, people are chomping at the bit for the next big move.

But look at the numbers. Apple has a $60 billion market cap, and Disney's is over $50 billion. Apple's cash on hand is in the $10 billion range. And does Apple really want to own ESPN and ABC and Disneyland, Disney World and the whole bit? Wouldn't Apple prefer to continue dominating the technology space in innovation, and leave media monopolies alone? Wouldn't a Disney acquisition eliminate the possibility of working with NBC's shows on iTunes, or working with Viacom/MTV? It would seem the conflicts and competition would outweigh a purchase of Disney - Pixar or not.

Steve Jobs has surprised us before. Apple's acquisition of Next resulted in Jobs' triumphant return to lead Apple to unforeseen new heights, but an acquisition of Disney? Only in a business reporter's dream world!

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