“‘We are always looking at acquisitions,’ Apple Inc. Chief Executive Officer Tim Cook told analysts last month. ‘There’s not a size that we would not do,'” Alex Webb and Alex Sherman report for Bloomberg. “But Apple has struggled for years to pull off bigger deals because of a series of quirks: an aversion to risk, reluctance to work with external advisers like investment banks and inexperience in closing and integrating large takeovers, said people who have worked on acquisitions with the company.”
“Some analysts and investors argue for a big acquisition, especially in online video streaming. Apple has started distributing videos through the Music service, and pooling other providers’ video in its mobile TV app, but it has no service akin to Netflix or Amazon.com Inc.’s Prime Video,” Webb and Sherman report. “On Friday, Sanford C. Bernstein analyst Toni Sacconaghi said Apple needs at least one big acquisition in online video. To reach its $50 billion target, the company must find an extra $13 billion in services revenue over the next four years — beyond what it can generate itself. Netflix Inc. ended 2016 with sales of less than $9 billion, so even buying that business may not be enough, the analyst said. Other potential blockbuster Apple acquisition targets include Walt Disney Co. and electric carmaker Tesla Inc., Baird analyst William Power wrote in a recent note to clients.”
“The presidency of Donald Trump may spark tax reforms that free up more Apple cash to spend on takeovers. But so far, the company has tip-toed around the edges of some of the biggest transactions re-shaping the technology industry,” Webb and Sherman report. “‘There’s a swagger — you may call it arrogance — about the culture there,’ said Risley of Architect Partners. ‘They’re used to being able to muscle their way in and get attractive economics.'”
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MacDailyNews Take: As as we wrote last May:
What is unique about Netflix? A handful of TV series are not worth $40 billion. Apple is perfectly capable of taking on Netflix without having to buy them, deal with integrating their employees, etc.
Until Apple actually buys Netflix, we’ll keep saying that Apple will buy Netflix for the same reason they bought Palm.
Now, Disney, for example, would be a much different story, as it teems with synergies for Apple Music, iTunes Store, iBooks Store, App Store, Apple TV, etc.
That said, there have been a number of smaller deals that Apple blew for whatever reason regarding specific content properties that could have made Apple TV quite a different proposition than it is today, including NFL Thursday Night Football streaming exclusivity and/or The Grand Tour, to name just two would-be game changers.
With the amount of money Apple has, even wildly overpaying for the right content in order to maximize the install base for things like Apple TV might prove to be a smart move over the long run.
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