Jim Cramer: Apple should buy Harman, needs revenue streams

“Apple needs to come up with revenue streams beyond iPhones during 2016, as investors believe that any company involved with cell phones will see a downturn, TheStreet‘s Jim Cramer said on CNBC’s Squawk on the Street [on Monday],” Rachel Graf reports for TheStreet.

“Shareholders don’t own Apple stock for an ‘upside surprise,’ but rather because they believe it’s an inexpensive stock that will be able to come up with a better revenue stream, Cramer contended,” Graf reports. “He noted that Apple can ‘prove it’s more than just cell phones” by either buying or producing a second revenue stream.”

MacDailyNews Take: Apple doesn’t make cell phones. They make computers in all sizes from pocketable on up. Some of them come with apps pre-installed that allow users to make voice calls via cellular networks.

“A possible acquisition for Apple CEO Tim Cook should be Harman, Cramer argued. The manufacturer of professional audio, video, lighting and control systems is ‘deeply embedded’ in the BMW, Lexus and Mercedes families,” Graf reports. “Apple should acquire Harman in time to insert its technology into cars worth $100,000, Cramer explained.”

“The company needs to own cars’ Internet of Things to pair with its mobile phones,” Graf reports. “‘Look, it isn’t too much to ask for Apple to stop its endless buyback and increase its exposure to the other mobile force – autos. It must be the brains of your car… all cars. Right now, that’s Harman. Why not just buy them for $9 billion? Shareholders won’t even notice the lack of cash, but the analysts would be forced to revise their numbers to include recurring revenue streams from different auto companies as they come on stream,'” Cramer stated.”

Read more in the full article here.

MacDailyNews Take: Buying Harmon would be Apple’s biggest purchase in history, times three. Integrating a company with 28,000 employees is hardly a trivial matter. Apple needs more focus on their existing products and services (to say nothing of “secret” projects already underway), not more distractions.

SEE ALSO:
Jim Cramer: Apple should buy Harman, Pandora, Fitbit and Verifone – December 23, 2015

29 Comments

  1. Cramer is nuts. Apple has plenty of revenue streams already. Not counting the single largest revenue stream known to mankind (iPhone), they also have iPads, Macs, Music (iTunes & Beats), Watch, etc. Revenue streams are the absolute least of their issues.

    1. I agree with MacDailyNews take on this one. Apple doesn’t make cellphones – they make personal computers – they were pioneers in personal computers – they continue to be so. The iPhone is one of the most personal computers that Apple has ever made, and it happens to have the ability to make cell phone calls to boot.

      This is the single biggest mistake that people who don’t understand Apple continuously make.

      Apple isn’t in the cellphone business or the music player business or the camera business or a word processor or an entertainment device or an communication device or a internet device, etc. etc.

      They are in the business of making computers, especially personal computers that can accomplish all of those functions for you so you don’t have to carry around 15 different devices.

      Wall Street doesn’t like Apple, because their business eliminates 15 other businesses. Consumers love Apple, because its business eliminates purchasing devices from 15 other business and makes them more productive.

  2. It’s not so long ago that analysts were demanding that Apple starts a buy-back programme, now Cramer says “Look, it isn’t too much to ask for Apple to stop its endless buyback”

    Following the advice of analysts would be sheer folly. They change their opinions whenever the wind blows. Apple is steering a course that works over the long term.

    1. … and in that you have demonstrated just why all these anti Cook/Management diatribes are so overwhelmingly deluded on here and elsewhere. Whatever they do they will get challenged and condemned by analysts and Wall Street alike who rarely question Google and others and very often by the very same ‘critics’ who change their flow depending on what Apple are doing at any given time, even if its what they themselves told them to do previously. There certainly is a lot of Coolaid around but it certainly isn’t at Apple that it flows so readily thats for sure.

  3. Revenue from Apple TV will ramp when the “skinny bundle” agreements are reached between networks and other content providers…..

    Now back to the narrative………….apppple is dooooomed…..they don’t have market share like scamdroid…….they can’t do anything………blah blah blah……….
    Just own Apple……..N_E_X_T!!!!

  4. Hey Cramer, you idiot, HK just projects an EBITDA for next year of $880 million. Even if they make the truly ludicrous assumption that Apple can turn that EBITDA into a true pretax profit (through synergies with Apple’s products, Apple’s increased marketing muscle, and other efficiencies) then it will take over 10 years to realize the return on an investment of $9 Billion.

    Cramer, did you notice that HK is doing a stock buyback too? Let’s join two companies that are doing buybacks and then stop the buybacks. That will sit really well with stockholders! Idiot.

    (Just for the record… I think virtually 100% of the time buybacks make no sense. True, there are exceptions, but what Apple and HK are doing fit none of the very few exceptions with which I would agree. Buybacks are a road to diminishing effects. When do you stop them? When the company has one million outstanding shares? One thousand outstanding shares? One share? When the company goes private [like Mikey did?]?

    1. Buybacks make sense when you reduce the cost of dividend payouts. What I don’t like is the taking on of debt. Sure Apple have 200B overseas to cover it and at current rates it is cheaper to take on debt. But I still don’t like debt since you have to pay it off at some point.

    1. Yes Division QNX company which was owned by Harman Appl should have bought it but that divisions was bought already by Blackberry and will be in every automobile! Apple will be using QNX though in their CarPlay app for cars! So they won’t own it – they will be paying Blackberry to use it! Maybe Harman still has something else for Apple to buy!

      1. Umm, Apple doesn’t pay RIM anything. QNX is licensed and used by car makers as their embedded in-dash OS. Apple makes their Car Play interface (which runs on QNX) available to those auto makers that want to make it available to their customers.

        1. Almost right, Michael. QNX *provides* the interface to CarPlay (and Android Auto). CarPlay does NOT “run on” QNX.

          Otherwise, I agree with your comment.

  5. I have always maintained that besides companies that either have people,technology or patents Apple needs Apple should go it alone That said,there is a company that I believe Apple should buy that has all those assets although privately held Dyson I would be a great purchase.

  6. Cramer – get with it Harman sold that division of his company you are referring to which is called QNX to BBRY Blackberry years ago! Boy did he ever make a mistake. QNX will be in every automobile and even apple will be using QNX owned by blackberry in their CarPlay system! Just a FYI Cramer.

  7. Forget it. Buy Ben & Jerrys and change it to iCream. Open them next to Apple Retail Stores for a one two knockout punch. Generate additional Billions per quarter!

  8. Apple doesn’t need to buy Harmon to capture their revenue stream. That’s like saying Apple should have bought Blackberry to get into the phone business.

    The automotive entertainment and navigation space is just a sliver of hardware and a mess of software. Both of which Apple can do better and cheaper.

    For Apple, starting good businesses is cheaper than buying good businesses. And as MDN notes, they can do that without the distraction of having to indoctrinate tens of thousands of outsiders.

  9. Apple bought Beats. That is all the audio equipment manufacturing they need. Why would Apple need to own JBL, Behringer, Harman Kardon, etc. Are they getting into the recording studio business or theater business?

  10. Oh, jeez guys. Stop thinking that Apple is perfect. And the guys here at MDN need to get off their holy tirades once in a while.

    Apple does make cell phones, just like every other cell phone maker does. We all know that smartphones are computers too, but they are phones in the modern sense, and Apple’s sales are 65% dependent on them. That’s never good. They need to do something about iPad sales, because even though my daughter and I love our iPad Pros and pencils, I doubt that’s enough to turn it around. I’m pretty sure it’s the 8″ model that’s suffering the most.

    I do think a new 4″ phone is a good idea, if they can keep the price down. $499 would be great.

    They need to make a major upgrade to the Mac Pro, and they need to do it soon. It’s ridiculous that their top pro machine is left out in the cold for two whole years! I’ve been waiting for a new one, and the wait has been too long. The same thing for all their other pro software and such. They’re ignoring it. This is a very bad thing. And what about a new pro monitor? What’s with that? Their new 27″ iMacs have far better screens than the old monitor they still sell. I just bought a new 27″ iMac for my daughter, and the screen is fantastic, particularly for the video editing she does so much of.

    I don’t know about buying Harmon though. It’s no worse than any other idea I’ve seen. Cramer has never been a big promoter of Apple’s stock buy backs. I’ve been railing against the idea for decades, and wasn’t too happy when Apple began it. What good has it done? None whatsoever. If it had, the stock would be pushing $150 right now. Apple’s stock goes up and down depending on sales, profits, and perception of where those sales and profits will be the next year. Stock buybacks have almost no long term effect on the stock price. I’d rather they raised the dividend. I’ve got a fairly large amount of Apple stock, and I’m happy with it, but yes, there are things that Apple could be doing better.

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