Apple’s war chest approaches $300 billion; acquisition talk ramps up

“Sitting on $200 billion in cash and eager to fill gaps in its product line, Apple may find it irresistible not to snap up a company or two, say analysts, mindful of Apple’s war chest,” Jon Swartz reports for USA Today. “There are plenty of candidates, says Daniel Ives, an analyst at FBR Capital. He foresees a ‘Christmas M&A list’ that includes GoPro, Box, Adobe and Tesla Motors.”

“Ives readily admits the report is highly speculative, but he does raise a point: ‘Apple needs to double-down on the enterprise, and it is in prime financial shape to do it,’ he says,” Swartz reports. “‘With so much cash in the coffers, and growing, we can finally envision Apple making a large acquisition’ to ‘building out new technology growth’ for the next decade, Ives said in an interview. By the end of 2016, Ives estimates Apple will have $250 billion to $300 billion in cash.”

“Apple has shown a predilection to purchase under-the-radar ‘value’ companies that specialize in advanced user interfaces that range in cost from tens of millions of dollars… Those acquisitions could be termed acqui-hires — something Apple has done to excess in poaching engineers and designers from Mercedes-Benz, General Motors and Ford Motor to work on its rumored car project, code-named Project Titan. Apple has also raided electric car maker Tesla for workers, dangling steep salaries with generous bonuses, according to a report in AppleInsider,” Swartz reports. “”

Full article here.

MacDailyNews Take: For some perspective, $300 billion can buy you Disney with $112 billion left over.

27 Comments

  1. Really??? GoPro? Box??? I can’t believe how many fools out there follow the “You have a big pile of cash so it MUST be spent. Acquisitions are hard and most often destroy share holder value. I’d rather Apple buy more Apple stock than waste it on GoPro or Tesla. Now Dropbox might be interesting to help along iCloud, or maybe do what Anschutz did with the railroads, buy some media companies, sign a deal to use their content then sell the assets off again for as much as you bought them or an amount less than you “would” have paid for the rights to the content.

    1. In addition to impact on shareholder value, the more important consequence of acquisitions (especially larger ones) is that they destroy corporate culture. Apple has a very unique corporate personality; diluting it with thousands of incoming staff with completely different work attitude, procedures, corporate thinking, would significantly reduce Apple’s greatest qualities.

  2. Apple has no business expanding into enterprise. The only reason Apple has managed to become this huge is its ability to turn on a dime, to jettison obsolete technology and push the new, dragging everyone with it (some kicking and screaming). In the past twenty years, Apple has moved from 64k to PPC processors; from System 9 to OS X; from PPC to Intel processors; from 32-bit to 64-bit architecture, and so on. None of these migrations (nor the huge benefits each had brought about) would have been possible with large enterprise clients tied around Apple’s neck, holding it down. Microsoft’s software is the bloated spaghetti mess of a code precisely because of the enterprise requirement for support of legacy code going back 20 years (some companies still run DOS software!).

    The moment Apple begins aggressive push into the enterprise is going to be the moment it becomes Microsoft.

      1. Every example I mentioned shows a ‘turn on a dime’. Apple took no more than three years to transition from one architecture to the next, leaving legacy code in the dust. PPC to Intel was especially painful for enterprise shops that had to budget for new versions of software that will run on Intel machines, since Rosetta emulation was simply too slow for meaningful work. Let’s not forget Apple’s big software development partners (Adobe, Microsoft, Quark at the time) who took their sweet time porting their flagship products to the new code, having done the same thing (System 9 to OS X) just five years earlier, not to mention the same thing ten years ago (Motorola 64k to PPC). Software development houses have little choice, especially those who focus on the Mac, but for the enterprise, these rapid changes were always a perfect excuse to abandon the platform and go with Windows, where you knew that MS was going to support 16-bit Windows 3.1 apps for the next twenty years…

        1. What was Apple’s market cap when it made those changes you listed above…everything other than 32 to 64 bit was when it was 20x smaller than it is now.

          32 to 64 bit architecture was not being agile…it was simply being ahead of others. It was obviously the future, Apple just made the jump earlier, but it didn’t cause issues with older apps, it simply allowed for more benefits to newly written apps.

          But for each situation of Apple jumping ahead like with OSX and 64 bit, you could also show a situation of Apple being late to the party like big screens, the Cloud, Apple Music, etc.

          1. Apple being ‘late to the party’ is a well known issue. Examples are plentiful (original 2G iPhone, when 3G was common; 4G iPhone 4, when LTE was common; no app store for a full year; 720p HD on original AppleTV when 1080 was common; 1080p HD on later-gen AppleTV when 4K became increasingly common, etc, etc, etc).

            I’m not sure what has market cap to do with the ability of the company to change direction. Twenty years ago, Apple didn’t have nearly as many employees as it does today (prehaps about 15% of today’s workforce), but even with the current 100k+ full-time staff, it is still far below comparable tech companies out there, and has by far the highest revenue (and profit) per employee. Regardless of all that, Apple continues to pursue strategies that allow best use of technology. They don’t jump on the latest bleeding edge; they let it mature, then embrace it and discard the old. This is the behaviour of an agile company (compared to the likes of Microsoft, Oracle, IBM…).

    1. I’m not entirely convinced. While one perspective is that enterprise will prevent innovation, another perspective its that Apple will force innovation on enterprise. That’s also a possibility (how possible, I don’t know, but it is possible). Apple could drag enterprise along with it (as it does with consumers). In fact, we’ve seen this historically: Enterprise “screamed” when Apple removed floppy disks (and then DVD drives) from their computers. But, lo and behold, they all followed. So I think Apple has shown that it CAN lead enterprise in the right direction…

      1. I don’t think Apple ever forced innovation onto enterprise. Big enterprise hardvare vendors (HP, Lenovo) took ten years to eliminate floppy from their devices, and they only did after the enterprise clients told hem they could do this. Enterprise NEVER followed Apple; ordinary users did, and when they adapted their workflow as a consequence, they carried it over into the workplace. Floppy disks disappeared when users simply learned how to attach and e-mail files instead of saving onto a 1.4Mb clunky disk. Once they learned that, enterprise finally decided that the floppy can go, ten years after Apple took it away form their Mac users.

        I really wish enterprise follow Apple’s innovation, but in reality, it is never the case. Apple’s innovation eventually reaches enterprise only when regular users embrace it and bring it into the workspace. IT drones initially always reject it with force, only to eventually succumb to the pressure (usually, from above) and let it in.

  3. In one way Apple are like the Borg – they assimilate to add technological distinctiveness to the company.
    However they are picky and will only buy if it fits into their goal.
    I disagree that Apple has no right expanding into enterprise. They won’t become like M$ because they will not be owning the server business. Instead they will be part of the app revolution that we see IBM latching onto. Well organized companies have software like SAP that can be used on tablets and PCs alike and doesn’t go near Office. Other companies are embracing cloud docs that allow them to create regardless of OS.

  4. Like MDN’s take. Disney gets you ABC and ESPN. But if Disney is willing to be a dance partner with Apple, maybe target a few of the other key networks, partner with Disney and launch the Apple “Cut your cord cable package”.

    1. And fire the dinosaurs at the acquired networks who refused to embrace the future. A win-win. In reality, Apple would probably only have to acquire one. The handwriting would be so large they would need a bigger wall.

  5. Question:

    I don’t know the answer to this. Apple has basically two sets of cash piles. One overseas and one here in the US. They can’t bring the overseas money to the US because of the tax rate. But can Apple use the overseas money to buy a company based in the US? I imagine they can use the overseas money to buy a company outside of the US. But if they can use their overseas money to buy a US company, would that help avoid any tax penalties?

  6. Apple needs to get into some business that takes away it’s “doomed” status. Apple has to be the wealthiest company around that is said to have absolutely no future growth prospects. Whatever it takes, Apple should change that as soon as possible.

  7. Why do they keep mentioning Adobe as a possible buy for Apple? If Apple had any interest in buying Adobe they would have done it long ago. It’s purchase might have antitrust implications as well. Not worth it.

    And as for Tesla, it would be a tragedy if Apple bought them. Elon Musk has a compelling vision and he should be permitted to see it through, economics permitting. If Apple bought Tesla, they could hardly keep Elon as he would not take well to reporting to someone else.

  8. I am no expert and it’s easy for me to spend Apple’s money.

    But I do wish Apple had two or three relatively major equal revenue streams along with the other lower revenue streams.

    Right now the iPhone counts for too large of a percentage every year and that always worries investors.

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