The confirmation and subsequent retraction by Vivendi Director Claude Bebear, who reportedly said that Apple "will probably make an offer" for Universal Music Group, prompted Apple CEO, Steve Jobs, to issue a statement last week that read, in part: "The press statements this morning attributed to Vivendi board member Claude Bebear are untrue, as Mr. Bebear has confirmed in a later report. Beyond these comments, we will abide by Apple's policy of not commenting on rumors."
Alex Salkever, in his Byte of the Apple column at Business Week Online, thinks the rumored move would be a bad one for Apple. He says the mere speculation of Apple buying the giant music company has hurt Apple's stock and going through with the deal would be even worse
"Even though Universal Music had an operating profit of $510 million last year and is cash-flow rich, the music business can fluctuate wildly year to year depending on the success of new stars and new songs," Salkever writes. "Besides, in my opinion, Apple is on the verge of a break-out quarter, with or without a music division in its future. A much-anticipated new line of chips should breathe new life into Apple desktop sales later this summer. And when graphic design and publishing program Quark finally comes out with an OS X version in the next few months, the pent-up demand for new Apple products in the creative sector could produce a surge in revenues."
On the flip side, Paul Gilster thinks an Apple-Universal Music would be a good thing, as he explains in a News Observer column. Though he admits that he (like everyone else) really has no idea whether Apple will actually buy Vivendi's Universal Music Group, he thinks such a union is a perfect fit.
"Give people an easy way to buy music on their PCs at reasonable prices, rather than the limited fare offered by services such as Musicnet and Pressplay, and the numbers could turn around," Gilster says. "I can't think of any company better positioned philosophically to provide such a service than Apple. The maker of the iPod has always been friendly to MP3 formats, and its iTunes software is far and away the best program for managing a music collection and burning it onto CDs. And unlike Microsoft, Apple has been far more circumspect about developing digital-rights management, or DRM, technologies."
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