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I've read several news stories about potential apple acquisitions now that 220M of cash is "coming home". Frequently cited areas of interest are content, and cars.

Frequently mentioned targets:

Netflix
Disney
Tesla

But I am not sure how value creating those would be (Netflix and Tesla trade at such a high premium, while Disney has no synergy with apple, IMHO).

I'd counter the following examples as better approaches:

Sonos (best wireless home audio technology...apple has always been into audio)
AMC (edgy original content producer, add this skill to AAPL, and for a reasonable price below IPO price)
VIA (instead of AMC, large content library, good content experience, reasonable price)
GM (brings mass market mfg expertise, strong position in EV and autonomous driving, good price)

AAPL could acquire all for cash and still payoff all debt and have 100B left.

Rob
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(Netflix and Tesla trade at such a high premium, while Disney has no synergy with apple, IMHO).


Although I agree that I do not see Apple buying any of those, I find the part about Disney having no synergy with Apple to be very amusing considering until his death Steve Jobs was the largest single shareholder of Disney.

Personally, of the three, I think Disney makes the most sense, but I still do not see it happening.

Kathleen
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RE: Apple/Disney synergy

What synergy do you see? How would apple make disney’s Business better or vice versa?

Steve became a shareholder of Disney through Pixar. In the early days Pixar looked like a technology play (their rendering software). Next and Pixar had a collaboration. But quickly Pixar became a standalone success and it wasn’t about technology development but entertainment.

I can’t think of anything the two businesses would add to each other.

I do love both businesses but only long AAPL.

Rob
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What synergy do you see? How would apple make disney’s Business better or vice versa?

I'm not a huge fan of Apple buying Disney, but I could see Disney helping Apple's services side of things, assuming they could get things past regulators (with the current Administration, that would be easy, I suspect). Disney is planning on launching its own streaming service (so most of its movies are leaving Netflix) -- suppose that was tied into iTunes so that the place to go to stream the latest Star Wars, Marvel, or Pixar movie was iTunes?

That's just one content-based example I could think of (I'm sure there are things Apple could do with ESPN, as well).

But, again, I don't like the idea, but there could be some benefits.

dsbrady
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Their best acquisition would be a couple hundred billion dollars worth of AAPL.

Great synergy. Fits their business model.

For me, one of the best things about Apple is that they don't squander capital on large acquisitions, which almost always end up a bad deal for shareholders in the acquiring firm.
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The idea of Tesla and GM being brought together under Apple'e 6 color beachball has possibilities. So does Disney and Hasbro. Each of these would allow Apple to expand into new technologies and consumer products and services. I would hope this would improve both the products and services of the acquired companies as well as Apples.

PF
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The idea of Tesla and GM being brought together under Apple'e 6 color beachball has possibilities.


Automotive has historically been 1) very capital intensive, and 2) low-return on the huge capital required. Electric won't help that. Self-driving will greatly worsen the situation (most buying will become fleet buying, by businesses with enormous buying and bargaining power).

This is precisely the opposite of the wonderful business Apple runs. Why in the world would you want to merge your wonderful business with a crappy one?? Sure hope the folks running Apple aren't so stupid.
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Frankly I don't see any of the candidates mentioned in this thread as being *that* suitable for an Apple purchase. To do so would limit further opportunities on other platforms - either through Apple wanting exclusive content or via subtle discrimination & direct competitive moves by the other big '5.' All those competitors have lots of cash also & an approach by Apple may even spark a bidding war which could easily lead to 'buyers remorse.'

Some examples why those candidates may not work ...

Netflix - As a service company Netflix relies on being 'seamlessly' spread across all significant platforms - think Samsung TVs, Apple devices, being a preferred player on Android, Rokus, PCs etc. Apple hasn't shown much interest in this (there's been no expansion of iTunes to Android, Apple Music is a poor player on Android) & that doesn't include the barriers that the platform owner may put in-place (e.g. YouTube on iOS which has some subtle barriers & discrimination against it.) If seamless distribution starts to drop, the content monetization starts to fall, which could lead to a significant loss of value. (You can see some of this in say iBooks vs. the Kindle market.)

Disney - Much like Netflix a key pillar for Disney is to have as much content as easily accessible as possible. This underpins the merchandising revenue, attractiveness of the parks & studios, even the under development streaming service (which Disney seems to be actively attempting to acquire further content for - FOXA for example.) Like Netflix, and for similar reasons, Apple would be a poor owner. (With Android being much larger than iOS worldwide any content limiting would really cost these types of businesses.)

Tesla/GM - Better candidates as they make stuff & don't try to distribute it everywhere. However a much different business & business model than where Apple's success lies. Apple doesn't try to build stuff, rather it designs & distributes stuff. I'd expect that Apple would be more interested in having a Tesla or GM build an Apple car for Apple to sell, rather than own the production itself. GM *might* be interested, but I'd expect Tesla not to be as they probably view themselves as the 'Apple of cars' so actively disinterested (so I'd expect would require extreme duress & no other options - which is unlikely - to accept an Apple offer.)

AMC/VIA - Content distribution issues limiting content value (Netflix/Disney discussion above) & without exclusive content there's no value for Apple.

Sonos - A better candidate but like Tesla probably view themselves as the 'Apple for speakers.' And Apple have an audio brand (Beats) that could extend into this space & Sonos is determinedly mobile OS agnostic (Sonos's new speaker has been developed to integrate Alexis & the Google assistant.) (Is there any news on how Beats' sales & profitability are doing under Apple ownership? Do they have more or less 'buzz'?)

The best candidate is perhaps Apple itself. That is invest in ensuring it's existing platforms are close enough to 'state of the art' as necessary. iOS & iWatch are in a relatively good place however the Mac family has a few gaps & is not actively updated quickly enough (especially the pro space), Apple Maps could use investment & development, Siri a lot of development, if Apple wants to compete in the home speaker space then it needs a lot of development (perhaps using the Beats brand & making this cross-platform like Sonos.)

And there might still be some other 'near to Apple' candidates, say a 'mesh wifi' company to prepare for the next generation of Airport (if Apple are interested - doubtful), some smart home companies (Ecobee maybe, maybe a smart lock company & a security company) to boost the 'it just works' for home automation. However there's really nothing that stops Apple from doing greater investment in its existing services & targeted acquisition now, so I don't expect much to change, other than special dividends & buybacks when it makes real sense. (Apple is really at a size where it may need a restructure & a bit more decentralization to further develop.)
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The idea that Apple is going to be in the car business in any meaningful fashion strikes me as absurd. The *actual* car business is messy: unions, oil, rubber, transport of big heavy machines to every village and hamlet, dealing with dealers (or like Tesla, fighting ancient laws). Bah. What foreign producer is going to rebadge their product and give away the glory? And how comfortable would Apple be putting their brand in someone else’s stamping plant?

I even doubt the idea that Apple will have a meaningful place in the cockpit, although I’m less convinced of that. No automaker is going to want to turn over the most important functions of the cars to some third party who could then hold them hostage in a meaningful contract negotiation. Putting Bose speakers in the back of a car is one thing, turning over the dashboard and all electronics is quite another. Is GM or anyone going to say “Sure, take over the driving functions, but we’ll keep the liability if your software drives somebody into a cement truck.”

But honestly, I’m still trying to figure out the strategy of the home assistant. If there’s money in “home assistant” then it needs to be great - because there’s real competition. If you’re using it for something else, well, what is the something else? If you’re going to be a video provider, you need to have the deepest library (or the best in some genre, or *something*). This is a winner-take-all market (think: Blockbuster, back in the day) and now it’s Netflix. I don’t see how Apple TV gets around that, except by swamping the field in some other way, as Amazon is doing with cheap pucks named Alexa, and Google is now doing with its version.

Given that I own one of each, I can say that Siri has gone from first to worst, many times she doesn’t even understand the question, much less have an answer. At $300+ the Apple entry is certainly not going to be everywhere, and in most houses I suspect they’re going to be nowhere, so it’s hard to see how that reinforces Apple Music/iTunes, etc. I get that you can make a lot of money serving an elite clientele (Beats!) but if you are looking toward “ecosystem”, well, I don’t get it.

Google is surrounding the home with its Nest suite (camera, thermostat, smoke alarms, etc.) and Waze and such, and Amazon is surrounding the consumer with, well, everything (Prime! Books! Whole Foods!) and even with that they’re no match for Netflix in the video world. Google has YouTube, ho hum. I think these wanna-be media titans are grasping at straws. Amazon won an Oscar with their billions spent on programs, but has that made them a power? I don’t think so. Video Prime is still just a free add-on; they’re discounting membership without calling it discounting. Now Apple is going to spend “billions” producing movies, or videos, or something. Why? They’ll be lucky to make it to third place on most people’s video option menus. Apple, of all companies, should know what it’s like to have a small marketshare and fight the content battle - as they did with “programs” back in the 80’s and 90’s.

Well, this is a long ramble, and I’m equally sure people are going to be buying iPhones and such for a long while so it’s not a diss of the company, but the “strategy” looks a bit like a jumble: throw a bunch of stuff at a wall and see if something sticks. That doesn’t usually work, I don’t think. Can anybody see a strategy here? Or articulate it other than “sell products” to people who can afford them?
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No. of Recommendations: 11
I've seen "Apple should acquire this big company" articles many, many times. They're a dime a dozen, and they have as much impact as "Apple should build this or that product" (e.g. Apple television, iCar) or "Apple should stop making the Mac/iPod/etc.". The big companies aren't purchased, the new products aren't made, and the suggestions by this or that pundit or analyst are forgotten. S'funny how the analysts still have their jobs after so many failed prognostications, but that's not news to anyone here.

A list of Apple mergers and acquisitions is at https://en.wikipedia.org/wiki/List_of_mergers_and_acquisitio..., and it seems to me that Apple's acquisitions are carefully geared toward inclusion with or enhancement of existing products, rather than acquiring entirely new and ludicrously large and unwieldy businesses (e.g. car manufacturers and media conglomerates).

-awlabrador
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The most possible way is that Apple will use this cash to buy back stock and make shareholders happy with dividends.
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