Apple’s next big move? Buying Nintendo

“Apple needs its next big thing — fast. With its shares down nearly a third in the past three months and the financial guidance bombshell earlier this year, the burning question turns to what Apple can do to spark a turnaround,” Tae Kim writes for Barron’s. “Apple has hinted that it will act boldly to revive its fortunes.”

“CEO Tim Cook reminded investors in a recent letter that Apple’s goal is to be ‘net-cash neutral’ over time, meaning that Apple needs a use for its $130 billion in net cash,” Kim writes. “So far, that has meant buybacks and dividends. But in a recent CNBC interview, Cook made it clear that the company continues to ponder large acquisitions, as well: ‘We’ve elected so far not to do those because we haven’t found one that we said, ‘Wow, that’s a nice intersection of Apple.’ But I’d never rule it out.'”

“The best fit for Apple may be Nintendo, its stylistic twin in Asia. Like Apple, Nintendo likes to make money. Both companies have similar attributes: mountains of cash, gushing profits, beloved brands, loyal customers, and sticky ecosystems of software and services,” Kim writes. “Nintendo has struggled to gain traction beyond its home consoles. Apple has a few things to offer there: Think iPhone, Apple TV, iPad, and maybe even the Mac… Apple could help Nintendo aggressively scale its Nintendo Switch Online paid subscription business, which enables robust multiplayer online services and access to a classic games library. All told, Apple’s ecosystem powers 1.4 billion active devices.”

“Perhaps the best part of the deal? Apple may be able to acquire the highest quality videogame publisher in the world at a reasonable price,” Kim writes. “Nintendo has a market value of $34 billion, but Nintendo is conservative with its capital and has approximately $9.6 billion in net cash. That gives the company an enterprise value of about $24 billion. If Apple offered a 50% premium to Nintendo’s market value—a deal that Nintendo would have to consider—the price tag would come to roughly $40 billion.”

Read more in the full article here.

“Nintendo Co jumped 4.6 percent, which traders said reflected reaction to a Barron’s article suggesting that Apple Inc buy the Japanese game console maker to spark a turnaround,” Ayai Tomisawa reports for Reuters. “‘Investors are taking heart from the article. But the rally will likely be short-lived’ as the potential consequences of any merger or purchase are not clear, said Hikaru Sato, a senior technical analyst at Daiwa Securities.”

Read more in the full article here.

MacDailyNews Take: Certainly, there’s a lot of crossover and synergy there. Whether Apple would ever make the leap from their largest-ever acquisition ($3 billion for Beats) up into the $40 mega acquisition realm is the question.

SEE ALSO:
Nintendo battles Apple for parts as demand for Switch increases – May 30, 2017
Nintendo Switch is the first console in years that’s truly exciting – March 4, 2017
Nintendo Switch vs iPad Mini 4: Which is the better games machine? – March 3, 2017

7 Comments

  1. well, if like Microsoft back in 1999, let alone Sony and others, developed a game platform, they would be dominant, but somehow they missed out on that “small market” It’s almost like Apple Lucked out with the iPod, and then did what everyone knew was needed, Combined that with a phone and a camera, *(i used to carry all three in my pocket and say now who’s going to do it) They made a bundle of money and here we are. it seems obvious that Apple would be in gaming, but alas, no… somehow they never figured it fit in their special walled garden… I honestly picture people doing crossword puzzles at the spaceship complex. or endless customer service. Where’s the innovation, Thus a P/E of 12 – Honestly, wouldn’t you as a Apple fan LOVE to know Apple was developing great games for their computers? Christ almighty, what does it take, Also, There are plenty of reports that say Microsoft doesn’t make much on the Xbox, if anything, BS,,, Now isn’t that the walled garden argument of why you’d like great content for FANS? Just tired of the glacial pace to turn out anything. F.I, Just invest elsewhere, like it seems many did.

    1. Apple screwed up gaming on the iPad. They could have developed a good gaming machine but failed to work on it properly and let the whole iOS store fall into in-app purchases.

      I’d rather that didn’t happen with Nintendo.

  2. How long would it take that Nintendo division to make back $40b in profits Apple would need shell out for it? A decade?…

    I don’t think so. Apple could spend a few billion developing and promoting a new Apple TV Plus that could play games galore and do all it needed to do in becoming a fun-family-place entertainment solution… And make it’s investment back into the red really, really, quickly.

    The Japanese culture and Apples? What an absolute miso-mash. “Hey, let’s merge Mercedes and Chrysler! Both can do no wrong right now and they’ll be great together.”

    Crash and burn…

  3. I don’t see what Apple could bring to Nintendo. Neither company is particularly good with network services. When it comes to user interface, Nintendo is frankly better then Apple.

    Maybe Apple should buy Canon or Nikon and make camcorders.

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