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Pros: ‘This Acquisition’ Makes Sense For Apple

Tuesday, 26 Oct 2010 | 1:54 PM ET

Apple's $51 billion cash stockpile has led many investors to ponder a possible takeover move.

Of course, that chatter has been brewing for quite some time -- but it kicked up a notch or two recently after Barron's said Apple could be contemplating a big move; and the magazine named Sony as well as Adobe and even Disney as potential targets. Sony shares spiked on the news.

But the Fast Money desk has its collective ear to the ground and we're hearing the Street doesn't think any of those names make sense.

Apple to Acquire Netflix?
Apple's $50B cash stockpile has led many investors to ponder its next takeover move. Brian Marshall, of Gleacher & Co., and the "Fast Money" traders discuss whether Netflix could be the next strategic opportunity for Steve Jobs.

"Sony isn't that innovative of a company," says Gleacher analyst Brian Marshall on the Halftime Report. "They failed to recognize the importance of software and failed to innovate. I don’t see Sony adding much to the portfolio."

However, that's not to say the Street thinks a deal is out of the question entirely. There is another name -- Netflix . Could Netflix and its expanding subscriber base be the next "strategic opportunity" for Steve Jobs?

"That kind of transaction makes sense", says analyst Brian Marshall. "Apple wants to be the first company to integrate the home office and living room. And what’s limiting them is content and better broadband into the home."

And according to Marshall, what better way to do that than with an extensive movie library.

"Currently iTunes has about 10,000 movie titles and Netflix has over 100,000 titles. I think that would be a pretty interesting marriage," he says.

And unlike some of those other rumored deals, "if they paid a 10% premium for Netflix it would be a $10 billion deal. That would be less than 20% of total cash if they paid all cash. It shouldn’t drag down the stock.

What do you think? We want to know!

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MARKET BUZZKILL: WORLD’S BIGGEST STEELMAKER WARNS

Looking at a market buzz kill, investors pummeled shares of Arcelor Mittal - the world's largest steelmaker after the company issued a weak fourth quarter outlook citing weak demand and higher costs.

In fact higher costs are a theme in many earnings reports this season.

Kimberly Clark said on its conference call the cost of inflation was the highest ever in the third quarter, while JPMorgan took down estimates on Sanderson Farms and Tyson due to high corn costs.

What’s the trade?

The takeaway here is that some companies can pass along these rising costs and other can’t, explains Joe Terranova.

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CALL TO THE FLOOR: BE AEROSPACE

Shares of BE Aerospace popped on Tuesday after its third quarter earnings release yesterday showed it benefited from increased passenger travel.

How should you trade the stock now?

Don’t make a move until you check out our interview with BE Aerospace CEO Amin Khoury.

Watch the video now!

BE Aerospace CEO on Q3 Earnings
Amin Khoury, CEO of BE Aerospace discusses his company's earnings and outlook with the "Fast Money" traders.

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CALL THE CLOSE

Steve Cortes: I’m a seller.

Brian Kelly: I’m a buyer.

Joe Terranova: I’d put RIM on the radar. (Click here for Joe Terranova's RIM trade in the web extra.)

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Trader disclosure: On October 26th, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Terranova owns (APA), (AAPL), (AXP), (C), (GOOG), (GS), (IBM), (ISRG), (MCD), (MDT), (MMM), (NKE), (ORCL), (OXY), (PCP), (PEP), (PFE), (UPL), (VRTS), (XBI); Jon Najarian owns (AAPL); Jon Najarian owns (ADBE); Jon Najarian owns (CCL); Jon Najarian owns (COH); Jon Najarian owns (JEF); Jon Najarian owns (NFLX) call spreads; Jon Najarian owns (RIMM) call spreads; Jon Najarian owns (WMB) call spreads; Jon Najarian owns (NRTS) call spreads; Jon Najarian owns (ANF) call spreads; Cortes owns (K), (TSN); Cortes is short crude oil; Cortes is short gold; Cortes is short (RSX); Cortes is short the U.K. Pound; Cortes owns the S&P 500

For Brian Kelly
Accounts managed by Kanundrum Capital own (JEF)
Accounts managed by Kanundrum Capital own (GLD)
Accounts managed by Kanundrum Capital own (GDXJ)
Accounts managed by Kanundrum Capital own (SLV)
Accounts managed by Kanundrum Capital own (PPLT)
Accounts managed by Kanundrum Capital own (REE)
Accounts managed by Kanundrum Capital own (MCP)
Accounts managed by Kanundrum Capital own (POT)
Accounts managed by Kanundrum Capital own (ANDE)
Accounts managed by Kanundrum Capital own (JO)
Accounts managed by Kanundrum Capital own (JJG)
Accounts managed by Kanundrum Capital own (SGG)
Accounts managed by Kanundrum Capital own (NIB)
Accounts managed by Kanundrum Capital own (TIP)

For Joe Terranova:
Terranova is chief market strategist of Virtus Investment Partners, LTD.
Virtus Investment Partners own more than 1% of (ABAX)
Virtus Investment Partners own more than 1% of (ALK)
Virtus Investment Partners own more than 1% of (AMKR)
Virtus Investment Partners own more than 1% of (CASS)
Virtus Investment Partners own more than 1% of (CSVI)
Virtus Investment Partners own more than 1% of (IGE)
Virtus Investment Partners own more than 1% of (LDR)
Virtus Investment Partners own more than 1% of (LPHI)
Virtus Investment Partners own more than 1% of (MGRC)
Virtus Investment Partners own more than 1% of (NRCI)
Virtus Investment Partners own more than 1% of (DBV)
Virtus Investment Partners own more than 1% of (XLB)
Virtus Investment Partners own more than 1% of (XLP)
Virtus Investment Partners own more than 1% of (XLY)
Virtus Investment Partners own more than 1% of (XLF)
Virtus Investment Partners own more than 1% of (XLI)
Virtus Investment Partners own more than 1% of (XLU)
Virtus Investment Partners own more than 1% of (SUBK)
Virtus Investment Partners own more than 1% of (WDFC)
Virtus Investment Partners own more than 1% of (YDNT)
Virtus Investment Partners own more than 1% of (DRYS)

For Brian Marshall
***No Disclosures***


CNBC.com with wires.

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ADBE
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BEAV
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DIS
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1767
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MT
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NFLX
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SAFM
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6758.T
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TSN
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AAPL
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