“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.”
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