The suggestion that Comcast (Nasdaq: CMCSA) and Apple (Nasdaq: AAPL) might get together and create a streaming service has negatively impacted stocks of two bystanding companies--Arris (Nasdaq: ARRS) and Netflix (Nasdaq: NFLX).
Arris, which supplies Comcast with its X1 set-top boxes, saw its stock decline 5.45 percent ($1.62) after news that Apple might be muscling in on its market--especially if Comcast gets its way and merges with Time Warner Cable (NYSE: TWC).
Zacks Equity Research, taking note of the market movement, tried to put things in perspective by pointing out that Arris occupies a strong spot in the home gateway space with a product that lets cable operators deliver content to "any third party Internet-enable devices including iPhones and iPads."
"Any agreement with Apple to deliver its TV streaming service will only expand the market size of Arris," the researcher noted.
Netflix, which is already battling for prime space on Comcast's broadband networks, also took an 8 percent stock hit as a result of the discussions. Rightly so, suggested Brian Solomon in a Forbes posting.
"While an Apple TV hookup on the nation's largest cable provider (one that could get even bigger if its proposed merger with Time Warner Cable goes through) still looks a long way off, Silicon Valley's biggest tech company poses a big threat to Netflix--especially if it can get cable providers on its side," Solomon wrote.
Of course that Apple TV play is no given.
"There is a fundamental mystery in why an Apple smart TV doesn't already exist," wrote Seeking Alpha's Mark Hibben. "After all, most mainstream consumer electronics companies already produce smart TVs so it's not a matter of technological feasibility."
It is, he suggested, more a matter of margin--as in how much money such a device would make.
"Apple knows that there's no money to be made in screens, per se," he wrote.
Apple also doesn't have a stranglehold on content, which would make any Apple TV play without a screen.
Hibben suggested that Apple TV can happen if the Silicon Valley company concentrates on pushing the boundaries of 4K television.
"The dearth of 4K content and the restriction of Internet-only delivery works in Apple's favor," he contended. "An Apple 4K television doesn't have to be able to carry the universe of content available to cable subscribers … it just needs to have substantial 4K content on iTunes. Even with relatively slow Internet connections, the Apple 4K TV will be able to download content unattended and store it on its very large hard drive."
That end product is a ways off, which leads to questions about why discussions about very early talks about an Apple-Comcast alliance would have any kinds of repercussions among providers with existing products.
For more:
- Zacks News has this piece
- Forbes has this story
- Seeking Alpha has this analysis
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