Apple should become a conglomerate: Investments Apple should make (before it’s too late)

“The classic M&A risk mitigation strategy is to work with a core theme and then execute. When the pundits speak, Apple’s core is digital technology,” Steve Andriole writes for Forbes. “But what if the core was driven purely by financial metrics across a diverse set of industries and companies that do nothing but reduce Apple’s market risk and make its shareholders richer?”

“The chances of Apple or any company remaining in the Fortune 500 in 2040 is less than 15%,” Andriole writes. “Nobody can create the greatest stuff forever. Not even Apple… let’s take the cash we have, and the amazing market cap we enjoy, and hedge, hedge, hedge. Our shareholders will love us a decade or two from now. Given the value of our stock, we can afford to do things today that we may not be able to do even a year from now.”

There’s no suggestion here that Apple should integrate these companies into any aspect of Apple’s core business. With ownership of, or significant stakes in, these companies (listed alphabetically), Apple will do just fine no matter what happens to the iHouse, the iHospital, or the iWorld:

• Accenture
• Actavis
• Agricultural Bank of China
• AT&T
• Boeing
• China Construction Bank
• China Mobile
• Diageo
• eBay
• General Electric
• Johnson and Johnson
• JPMorgan Chase
• Lockheed Martin
• Monsanto
• Proctor and Gamble
• SAIC, Inc.
• Samsung Electronics
• Scotiabank
• Telefonica
• Toyota Motor

“Ultimately, all this is a hedge against the inevitability of stalled innovation,” Andriole writes. “Yes, that’s right, the inevitability of stalled innovation.
Nobody can create the greatest stuff forever. Not even Apple.”

Read more in the full article here.

MacDailyNews Take: Yeah, Apple should buy Samsung Electronics and… (wait for it)

…SIDAGTMBTTS!

17 Comments

  1. Yet another “Apple should”… article! Thank God for that! Apple is so lucky to have the benefit of these peerless analysts dispensing valuable free advice! Without them, Apple leadership would be clueless, their prospects dismal, their products disappointing. Why, they’ve hung on by their fingernails for years—only just. The innovation trail is dwindling into a cowpath. Apple must diversify now!

  2. Another clueless Analyst!

    Apple does not obsess on money, like the analysts must. Apple obsesses on making the VERY BEST products possible and then relying on the quality of what they make to generate the money that has made them the biggest company in the world.

    Hey analysts, GOOD wins, BAD looses in the long run! If Apple continues to obsess on making the VERY BEST products possible, pleasing their customers, then they can continue to prosper indefinitely. HP and Motorola and Kodak and Xerox and etc. etc…. had “quality first” product cultures until they became dominated by the bean counters. How successful are they now?

    Following this “analysts” advice would likely result in Apples demise, using history as the teacher.

    I say, Apple, double down on Apple U and obsession on design. Ignore the analytical types who do not understand innovation, their brains are just not wired that way.

    1. What are you smoking. No one has profit margins in their business (and most other businesses as well) like Apple’s. If you think money/profit/success was not key to Job’s mindset, you’re a fool. Sure, he wanted to be the Mercedes of the computer world in regards to quality, but also in size and profits to be a success, but also to stroke his ego. While a Apple products are more affordable than ever before (yet oddly enough also incrementally updated), those about-30% profit margins remain for almost any product. They could have easily sacrificed those margins at any point in their history, but JOBS FEARED SCARIFICING QUALITY as a result. He didn’t want to be considered a Ford or Chevy. It’s a prestige thing, but with prestige their is always money.

      And of course, as their software is their prime market, quality is eroding quite quickly now that Cook is completely in charge. Is it political distractions, his need to be liked, or is he just not as driven and demanding? Pocketing a billion in stocks since taking his job, I think quality is clearly not the first thing on his mind.

    1. “Nobody can create the greatest stuff forever. Not even Apple”

      Steve Andriole thinks when someone makes something great, it is by accident. Since Andriole doesn’t know how to make great stuff, it is natural to assume that no one else can either.

  3. 1. Apple innovation is not equal in all products.
    2. Apple resources are not as extensive as RDF indicates.
    3. Apple competitive edge can come at the expense of any of the companies listed.
    4. Apple strategic partners can be any of the companies listed, even Samsung.

    As a brainstorming story, let us not dismiss ideas for discussion out of hand.

    There are plenty of ideas that Apple rejected that other companies picked up and won big. (Some ideas did not fit Apple’s DNA at the time, and probably still don’t.)

    If we ALWAYS like Apple’s ideas, then we are fanboys and the RDF is more important than independent thinking.

  4. Bean counters using their traditional Fortune 500 MBA bean counter theories will never understand Apple.

    what did the bean counters think when Steve Jobs ordered a million dollar plus Glass Staircase for an Apple store…

    “Waste of assets?… No other retailer would ever do such a dumb wasteful move… better to invest the money elsewhere… ?”

    Of course now Apple stores are the most profitable stores per square foot on the planet….

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