GBH: Apple likely to repatriate $200 billion of its $252 billion foreign cash hoard

“Could an expected windfall of billions of dollars from the tax break on repatriated overseas cash rekindle Apple’s apparent flirtation with an acquisition of Netflix?” Jon Swartz reports for Barron’s. “GBH Insights, in a report today, thinks so.”

“Apple [is] likely to bring back $200 billion to spend in several ways,” Swartz reports. “Daniel Ives, head of technology research at GBH, speculates: ‘The burning question on the Street’s mind is does (Apple CEO Tim) Cook make a big bet with this infusion of cash and do a larger deal (e.g. Netflix) to catalyze and jump start its streaming video/content business?'”

Read more in the full article here.

MacDailyNews Take: Think buybacks and dividends, not major acquisitions.

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. — MacDailyNews, May 27, 2016

Another $125 billion in buybacks would be seismic.MacDailyNews, November 18, 2016

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12 Comments

  1. even those expensive/not worth the money…Beats. He also likes getting along with the market and partnering with a big brand name seems to assert things are progressing with AAPL.

    MDN, really…”Apple perfectly capable of taking on Netflix…”
    Apple has not shown itself perfectly capable even with “the givens” like CPU releases…as in “where are they?” not a prescribed delay like iPhX, AirPods, HomePod and….
    The sentence is pap without “should be” and that’s open to scrutiny these days.

  2. Apple does need a kick start in video content. They’ve done terrible so far. TBH, they immediately gain a ton more Apple services users. The question is, does Apple see value in the content?

  3. why is this obsession with analysts with Netflix?

    1) Netflix is a cash negative business (it loses money if you factor in expenses for production costs etc)

    2) Netflix has a bloated 200+ P.E (layman terms: years for earnings to payback the price of the shares), Apple has a P.E of 18 or so.

    buying Netflix and probably letting Eddy Cue run it is incomprehensible…

    only reason analysts etc keeping harping Neflix is probably because their buddies own (bloated overvalued ) Netflix stock.

    1. I definitely think there are analysts trying to boost Netflix’s value even higher than it already is by constantly harping about Apple buying Netflix. Apple can become its own Netflix just as Amazon did with Prime Video.

      I don’t quite understand why Netflix is valued so high. I could see if it was a P/E of 50 or so but 200 is just crazy. Any company can obtain content as long as they have the money. Apple could run a streaming video service as a side-business and not even break a sweat. Somebody believes Netflix has some wide moat but I think any company that offers monthly subscriptions has nearly no moat at all. At least Amazon’s Prime Video moat is a yearly subscription to Amazon Prime.

      I realize Netflix is a FANG stock but as far as I can tell, it really doesn’t belong there. I’ll admit it has a high subscriber numbers but that’s about it. I like some Netflix original content but that’s not enough to give the company a P/E of 200+.

  4. Until Apple actually buys Netflix, we’ll keep saying that Apple will buy Netflix for the same reason they bought Palm. — MacDailyNews, May 27, 2016—

    I think they will buy NetFlix for the same reason they paid $3 billion for beats. As in beats the shit out of me.

  5. Do most of you think that Apple repatriated cash should help boost Apple’s value to reach $1T market cap? Wall Street seems to be downplaying that amount quite a bit and actually seem to be ignoring it as being worth anything.

    How many companies on Wall Street have ever had that much cash in hand at one time? I would think Apple is setting quite a precedence for such wealth. There aren’t that many companies that even have a market cap of $200B. All the news media wants to talk about is Apple having to replace a lot of iPhone batteries. So stupid.

    1. The only reason Apples market Cap is so high is because its has $250 in savings. The largest shareholders in Apple are Hedge funds some with as much as $33 billion invested and i think about £70 billion invested via 2-3 large Hedge funds.

      Once the money is back to the US and buybacks and dividends done, watch Apples share price drop alot. The game of investment and shares is sell high, get out watch the market drop then buy low and wait for cycle to repeat. This is the end of this cycle a drop is imminent

  6. Why should Apple bring back money from overseas and pay 15% when they can borrow money almost for free? They borrow at less than 3% and inflation is running about 2%.

    1. John, you seem to share a common misperception that this tax applies only to repatriated money.

      The new law assesses a 15.5% tax on foreign liquid assets owned by a US resident corporation, and 8% on foreign non-liquid assets like plants and heavy equipment. Once that tax is paid—and payment is mandatory, not voluntary—the taxpayer can bring back what is left without any further taxation or leave the post-tax cash overseas. Apple’s decision to bring money back or leave it abroad therefore has no tax consequences and can be based entirely on other business considerations.

  7. Disney has a market cap of $168 Billion and a PE less than 20.

    And yes, I know that it would cost more than the market cap to buy Disney, but it’s clearly well within reach.

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