“Rumors indicate that Apple (AAPL) and Comcast (CMCSA) will form some sort of partnership. However, a partnership with Apple will have immaterial financial impact as Apple’s revenue nears the $200 billion mark,” Alex Cho writes for Seeking Alpha. “The incremental add needed to sustain revenue growth would require more than just a new product category, it would require an acquisition. The acquisition would have to offer some strategic value to Apple, and it must operate at extreme scale.”
“At this specific juncture Apple should acquire Comcast,” Cho writes. “An acquisition of Comcast [with a market value of $127.96 billion] would make it the highest valued acquisition in corporate history, which may leave some skeptical of whether such a deal is even realistic. But considering the mounting pile of cash, and the slowing growth in Apple’s core hardware business, adding a high-margin service business could be its winning ticket to becoming a resurgent growth investment. It’s likely that investors will come to reward Apple’s management for its ability to create cash generative businesses from scratch, and its savvy acquisitions.”
“For the past 14 years, we’ve never seen a major technology company make any major headway into the old and well-established television industry. However, Apple may be the first to do this, if it plays its cards a little differently,” Cho writes. “If Apple were to buy out Comcast it can get an early lead, and establish the overall direction of network television, and broadband internet in the United States. This is because Comcast has 30% market share in the United States.”
Read more in the full article here.
I don’t think so. The way AAPL is dropping maybe Comcast will be able to buy Apple instead. Looks like another bottom under $500 before long. Remember $395? How long can Apple continue with no new products.
Of course, Comcast will not close to be able to buy Apple, but buying Comcast only has limited value: it is local provider that only covers 3% of world’s population. Even Apple will not be able to buy significant cable players in many key markets. So neither Jobs nor Cook ever bought Comcast.
Exactly. The only benefit to Apple is that they would learn firsthand what is involved in owning dumb pipes.
A far better investment would be to buy a small innovative content creation company… or exclusively partner with one.
The same 6 fscking years it went between the iPod and the iPhone?
too bad comcast is not a high margin service business
Yup. Comcast has these horribly inconvenient things called wires, servers, hubs, etc. etc. that like to go bad, get chewed through by rats, need upgrading, etc. etc.
Buying Comcast would just be Apple throwing money to cause a headache. Better to develop partnerships where Apple is not responsible for the hardware of content delivery except for the receiving unit.
If Apple buys Comcast, we are looking at a 50 year business model, as apposed to a 20 year business model, if things were to flatline.
That’s what I said weeks ago. The Last Mile would be in their pocket and finally provide Apple a walled garden without dependency on a third party for pipes.
But can anyone envision an Apple Inc., who isn’t dependent on anyone but their consumers? I can’t.
So why buy the cow as long as you’re still getting the milk? It costs a lot more to maintain a cow than it does to replenish your milk.
So then what? Apple buys Time-Warner? Apple buys Cox? Apple buys CenturyLink?
Eventually even Apple runs out of money, and between cash shortages and anti-trust laws, Apple STILL wouldn’t be able to serve eve half of its U.S. customers. And that doesn’t even begin to address international customers.
Buying Comcast is a poorly thought out idea.
Buying Comcast is a poorly thought out idea.
I couldn’t agree more. Hence my “why buy the cow” statement. You really should read a person’s entire comment before jumping to conclusions.
This writer seems aware of how badly the Justice Department wants to nail Apple, how US anti-trust laws work, or how Apple isn’t the type of company spend mountains of cash on bribing politicians to get away with things like this.
Apple does not want a cable company with its physical network- that’s WAY too capital intensive. Now, buying a television network like NBC (which Comcast owns) or the rights to NFL games, that’s another story. Can you imagine: you want to watch NFL games on mobile? You have to buy an Apple product. 🙂
Apple just needs to buy Disney, which owns, in a addition to an almost infinite media library, ABC, ESPN, Pixar, Lucasfilm, and pieces of companies like the History Channel. About $70B would buy controlling interest. Then use ESPN, which the cable companies cannot survive without, as a club to force them to the bargaining table for other content.
I agree, if Apple ever were to spend its billions on a big media purchase, it should be Disney. The two companies have been linked for so long. Steve Jobs, due to Pixar, was on Disney’s board. Bob Iger is on Apple’s board. And the vast Disney library and brands would complement iTunes. And of course, ESPN. Don’t know if it’s possible, or even necessary, but on paper, an Apple/Disney combo makes more sense than Comcast. Unless Apple really wants to “revolutionize” cable.
You know Apple operates outside the USA right? So this huge cost covers one, albeit large, market but ignores the majority of it. Apple makes deals specific to countries and rolls them out across the world as and when it can, but when have they made a large acquisition that does not benefit them globally? Maybe they should buy the worlds electricity generation and distribution. How about they mine their own silver and gold?
It also happens to be problematic that most of Apple’s cash is offshore. That means in order to buy Comcast, Apple would have to repatriate millions of dollars, pay at least 25% or more in taxes! and then complete the purchase, which makes Comcast essentially cost $30 million or so more than it should.
Whoops, should be “billions” instead of “millions”.
Apple should buy AT&T. Massively expand LTE bandwidth and invest in 5g infrastructure.
Make everything in the Apple work connected wirelessly. Don’t depend on the people who own the cables in the ground to deliver your content.
I hope Tim fixes the IMAP problem that makes Mavericks a useless FAIL for so many enterprise customers first.
IMO, Apple needs partnerships with ALL cable and streaming companies… if they own one (be it Comcast, or Netflix, or whatever), then they become direct competitors to all the others. Did Apple need to buy any single record label?
No they don’t. Cable doesn’t compete with cable in most markets, they compete with phone, cellular and satellite, which could be even MORE problematic for their content delivery.
comcast reported net profit of 1.91 billion.
say they earn 8 billion a year.
if apple invested 130 b in some kind of bond that gives 5% back they would make 6.5b a year and STILL keep the 130b.
Apple bought chip maker P.A semi for $278 m (one quarter of a billion) which help make the ‘A’ chips helping iPhone generate tens of billions in profits.
look at those numbers and you can understand Jobs strategy of buying small companies and ‘keeping the powder dry’.
I think Apple should just buy up everybody and everything, no more competition and no more lawsuits. Think of the money they would save.
Do you think Google is open to selling Congress to anyone?
Please do! Hopefully Apple can manage it better. Horrible institution today.
It is an interesting argument.
1- Much of the price can be recovered by selling off shit like NBC/Universal. Apple does not want or need to be in the content business and if they did- NBC/U would not be the one to choose.
2- Comcast has abysmal consumer satisfaction scores and would be the worst except for the existence of Time-Warner Cable, which Comcast is trying to buy. Apple would be buying a headache by inheriting the effed up mess that is Comcast customer service.
3- One option would be to buy it, change the policies to Apple’s liking and then to sell the damn thing off to the market. Another option would be to shut down the Cable operation and operate the company as a dumb pipe operation- read as a pure ISP. Apple could contract out maintenance of the infrastructure and keep the thing at an arm’s length.
4- As bad as the thought of buying Comcast would be, doing so would offer Apple opportunities otherwise unimaginable any time in the near future. If Apple wanted to build out it’s own ISP the project would take years and probably more money than buying Comcast.
From what we read deals can not be made between Apple and content creators because the content creators are scared. Buying Comcast would facilitate these deals. As soon as the Comcast is purchased introduce a unified UI Apple TV into the market. In a year or two deploy satellites and sell Comcast. Release phones and TV’s that do no need a dish and can still communicate with the satellites in any weather at high speed. Sell services through Apple Network. This will provide growth for years.
Here is an article in Ars on how big a pain starting an ISP can be.
http://arstechnica.com/business/2014/04/one-big-reason-we-lack-internet-competition-starting-an-isp-is-really-hard/
Buying one is quicker.
1-Maybe, but it would be at a loss.
2-Name a cable company that doesn’t have an ‘abysmal’ satisfaction score (regardless of how good they actually function).
3-When you buy something that large, you are buying into its future revenue stream for a return, hence they would lose huge sums to shut down the ‘cable’ operation.
4-Not if they did it wirelessly, which could eventually cover more markets than Comcast-Time Warner.
Wireless is already very congested and the US Telecoms reported that more data traffic is now passing through the cell networks than voice traffic. If the cell nets cannot handle busy data traffic in many cities now, how will they handle the primary load of a residential ISP?
Comcast sells 300GB/month per residential subscriber for about the same price AT&T charges for 5GB on 4G LTE.
You are thinking LTE freqs and caps from limited bandwidth.
These issues being dealt with, first off by fiber and/or microwave back hauls for huge boost in the bandwidth that LTE needs.
Also, there are many freqs that are still to be allocated/utilized that can open up more business models (white spaces, for one).
You can’t look at cell networks as being overcrowded anymore. They HAVE to up their game to compete, and they are doing just that. I work for an ISP and we sell quite a bit of bandwidth to cell companies via fiber to towers to handle this. The ‘cap’ limit is the next ‘speed’ feature that ATT, Sprint, Verizon and such will tout to gain advantage as soon as they are comfortable with its stability.
I’m serious.
I think Directv would be a much better choice. They could leave it as is for the millions who use it as it is now, and integrate their Apple TV to be a choose what stations you want and not have to pay for the 300 channels we don’t watch. Plus they get satellites than can carry internet connections. Cheaper acquisition, more benefits. Remember comcast owns NBC and Universal Studios. I can’t see Apple putting forth the massive effort there. Too distracting from their core business. Buy Directv Tim!!!
Apple should buy Google. And Nissan. And whoever makes Twizzlers, I really really like Twizzlers.
Hershey Foods makes Twizzlers
http://www.thehersheycompany.com/brands/iconic-brands.aspx#/Twizzlers
Right then: Apple should buy Google. And Nissan. And Hershey Foods, because they make Twizzlers, and I really really like Twizzlers.
Apple would NEVER buy Comcast. Cable companies, including Comcast, have one of the lowest customer satisfaction ratings of any business. Apple, on the other hand, has some of the highest customer satisfaction ratings. They would be stupid to dilute brand value and goodwill with a big acquisition like that.
Apple is not going to buy a frickin cable or satellite company! The guy who wrote this article is an idiot and smokes blue meth. He has absolutely no idea how those businesses work. Is he twelve? People, seriously, lay off the meth and stay in school.
Also, in all the years Steve was running Apple, how many new product categories did they enter?
Why Apple won’t buy Comcast:
1) Out of Apple’s expertise range.
2) Comcast’s work culture is corrupt and self-destructive. Turning that kind of customer-loathing biznizz bozocity around is nearly impossible. It would severely infect Apple with its illness. I’d rather see Comcast bankrupted and dissolved. That’s what it deserves.
Yes, and put 140,000 employees out of work plus 20 million customers out of service.
Good plan, Derek.
(are those glasses for shortsightedness?)
You’re such an idiot.
The demand for Comcast’s business will only increase. What’s bad is their business. Bad businesses die and good riddance. It’s part of what I call ‘BREATHING’ in business. In with the good new air. Out with the bad old air.
If business doesn’t breathe, it just rots. We have A LOT of rot in today’s business. Every ‘too big to fail’ business qualifies as rot.
So go take your dumbass neo-con-job propaganda and shove it back up where it came from, you blowhard.
–Yeah, I’m really sick of fake conservatives and their deceitful rubbish today. I have no use for their demolition of all good things in the USA.
Your turn TowerTone. Expect me to ignore you as I never value what you foist on us.
But he had his frequencies right, as I learnt dealing with the utility mouthpieces the other day
Monkeys and typewriters?
No. The guy isn’t stupid. He just loves having his fat head up his backside for most of the day. Like no one else around here, is disseminates utter nonsense as ‘fact’ all for his sacred causes of screwing over the world for his and his pals’ benefit. Loathsome behavior.
Comcast doesn’t have a product for much longer. As Google and other Fiber companies come into the market, things will change. You also have the Cell companies increasing the network speeds too, why by cable?
I hope bandwidth in the USA gets back to expanding again. Right now it is in a state of stagnation specifically because lf the lazy, money grubbing, customer hating behavior or the companies who ‘promised’ (like that means anything) to expand the system. Idiotic. #MyStupidGovernment is directly responsible for this insanity. They, sadly, are responsible for cleaning up their own mess.
Regarding cell tech: We’ve had the REAL G4 technology spec and hardware for years now, and not-a-soul around the planet is bothering to implement it. No one. Again: Stagnation. Money grubbing. Lazy. Customer hating.
Another aspect of the state of bad biznizz.
Wow, how cool.
First, I’m not a ‘neo-con’. I’m a Conservative. You still have no clue what the difference is and think ‘neo-cons’ sounds ‘worse’ because of the ‘neo-nazi’ connotations. Silly child. That just means it has some similarities, as in ‘neo-Conservatives’ employ some Conservative, moderate and liberal memes and are actually converted or moderate Democrats. I have repeatedly explained this to you and you still don’t get it.
Wrap you brain around this simplistic explanation; if ‘neo-nazis’ were worse in theory than Nazis, then why would they be called neo, since ‘Nazi’ implies the worst of any possible situation?
Whatever. I have already lost you.
OK. Comcast business will only increase, but bad business die? Huh?
Are we talking ObamaCare?
ComCast is not a bad business, it is just another utility that all people need or want, yet few understand how it operates so they automatically assume they know more about its intent, greed, and hate for common peoples (BTW, they lean heavily to the left, as does Time-Warner in contributions, but more so in lobbying).
Name me one cable company that has huge satisfaction numbers.
Or power company. Gas. Cellular. Phone.
You can’t because people complain more than praise a utility, no matter what function it is trying to achieve.
They ALL suck, and yet they (mostly) try.
I have just spent the last few days in a tornado/straight-line wind damaged town that has lost most of its power from two power companies, phone and cell and cable. I have watched Red-Cross, National Guard, churches, volunteers, and civic groups pull together with the ‘hated’ utilities to get trees removed, power on, communications restored, water and sewage running, schools back open, and food distributed.
But in a few months, when all is back to normal, people will be calling to complain about non-pays being cut off, ten minutes of interrupted service over a 30 day period, high bills and poor customer service, no matter what back-bending is done to satisfy them. That is life.
Get used to disappointment…..(your wife has).
Dear Mr. Cho,
We understand your need to publish or perish, and to get as many page clicks as possible. So we might forgive you for writing about Apple with so little understanding of the company. But as the old saying goes, “Better to remain silent and be thought a fool than to speak out and remove all doubt.”
Apple, Mr. Cho, is a global company. The US, and therefore Comcast, is not all of Apple’s customer base. So before your next “Apple should…” article, please reconsider your idea in the context of Apple’s total business picture. And then reconsider it again, this time against Apple’s history of making products and services available worldwide as quickly as possibly, more so when they control the experience right to the customer’s hands.
And then read some of the more enlightened comments above about the difficulty Apple would have financing such a project, running such a project, and maintaining brand because of such a project.
For your next article, contact the MDN editors to see if you can float your ideas here as a sort of trial balloon: It appears the MDN readership has greater wisdom than your editors do.
– MDN Reader
Apple should buy the Moon. Blow out a chunk on the upper right side. erect a huge leaf so the entire Earth see the Apple logo at night. WORLD DOMINATION through endless marketing & lunar gravitational pull.
Buy SpaceX too….
( sarcasm )
Why buy a copper network to compete with Google Fiber? Thank goodness most of the commenters here don’t run Apple.
Apple doesn’t buy the technology that they wish to eliminate. Apple makes that technology irrelevant.