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Apple $50bn cash - what potential acquisitions?

S

slashbinslashbash

Golden Member
Steve Jobs indicated in Apple's quarterly conference call that Apple would keep its $50 billion war chest on hand because they foresee "strategic opportunities" for acquisitions. My mind has been running through a few ideas.... these are all wild speculation, I have no connections to Apple other than owning their products and a few shares of stock.

1) Adobe. Market cap: $14.26bn. There is an intense rivalry in some areas and outright hatred in others. Still, Adobe makes some of the most well-known professional software packages out there, and half of Adobe's sales are for Mac. There are synergies there, and it would also put Apple in the position of making large software packages for Windows PC's as well as Macs. I wouldn't put this one as likely, but it is possible.

2) AMD. Market cap: $4.89bn. Apple is currently stuck with Intel, especially when it comes to things like the MacBook Air. (Which looks really impressive, and I want one!) But Apple is stuck with the oldy moldy Core 2 Duo's in the small and light notebooks because Intel integrated graphics suck and Intel won't permit 3rd party chipsets on the newest generation processors. The other option would be AMD, who is coming out soon with a SOC solution that should provide great graphics performance. But AMD loses pretty badly on the power consumption side of things, which is very important to Apple. If Apple bought AMD, they could immediately push to develop lower power solutions (Apple could also provide lots of R&D dollars). This also seems unlikely as it would put Apple into new market segments and surely piss off Intel to no small end, but AMD is priced low enough that it is practically a drop in the bucket. In this case, Apple would probably keep AMD running as a separate company for a number of years and simply provide them with money for R&D while also buying chips. This would be a good long-term strategic acquisition IMO because Apple could integrate AMD's margins into their own -- Apple is currently contributing to Intel's profits. If Apple owned AMD, their component costs would go down substantially. Half of AMD's earnings are eroded away by debt service; Apple could pay off AMD's debt, and AMD would start turning a profit right away. I know this seems unlikely, but the more I thought about this, the more it made sense.

Anybody got any more ideas? Likely or unlikely, who would you like to see Apple acquire?
 
I really don't see Apple acquiring Adobe or AMD.

Adobe doesn't offer anything that Apple could develop into one of their products.
Photoshop might be a nice pickup but there are currently smaller companies that offer similar products which are developed for OS X from the ground up. I could see Apple acquiring a product like Pixelmator instead of Adobe.

AMD....That one is tougher. They don't really offer the IP that Apple would want. Apple bought PA semi for its consumer electronics line and Apples does seem happy with Intel (for now) or they would be offering AMD systems.

Netflix - 8 billion - Currently eating into iTunes purchases, could provide nice infrastructure and licensing deals for streaming content.

Some SSD manufacturer - Apple is the worlds largest consumer of SSD, why continue to pay Samsung?

TiVo - 1 Billion - Great IP. Perfect pickup if Apple wants to enter the living room.

Electronic Arts - 5 Billion - Does Apple really want to make a push for games?

Yahoo! - Better to act fast before it gets picked up if Apple wants to enter the portal/advertising business.

um......seems like Apple likes to target smaller companies so.....

TiVo (still relatively small)
Plex
Pixelmator
Sipgate
 
As mentioned earlier...I think a company like NetFlix is much more likely to be purchased than a software/hardware manufacturer.
 
I doubt Apple will buy AMD simply because it doesn't fit with their MO lately. The lower cost of developing CPUs and GPUs in-house as opposed to buying them from AMD might not outweigh the overhead of taking on the entire business and becoming a direct competitor of Intel's. And then they'd be selling parts for the PC market? Just doesn't seem to mesh well.
 
Good stuff there. I had been thinking maybe a gaming company, either EA or Activision Blizzard. Is Valve privately held? It's funny, they mentioned Valve in the event yesterday, and basically what Valve has done is create an App Store for PC games. And Valve seems to fit better with Apple's philosophy overall. Of course the best match would be Nintendo, but Nintendo is too expensive and too Japanese.

My thoughts on what Apple would do with Adobe -- "Fix" Flash and completely re-work it (the client program). Same with Acrobat. Get rid of Premiere, replace with Final Cut Pro on both Mac and PC. Keep After Effects and integrate it with FCP. Keep PhotoShop, Illustrator, InDesign, DreamWeaver.

The AMD thing is kind of a pipe dream, I admit -- there's kind of a chicken and egg problem there. They couldn't switch to AMD until AMD processors got very power-efficient, but AMD might not ever get there by itself without a push from somebody like Apple. Maybe Apple could start putting AMD CPU's into iMacs and other desktop form factors where power consumption doesn't matter as much, but they have to maintain their relationship with Intel. I don't know if they would jeopardize that just to move part of their product line over to AMD. (Not to mention, it adds all kinds of driver issues as they have to deal with totally different chipsets.) Of course, Apple currently uses AMD GPU's, so that's a "foot in the door" for AMD. And who knows what Fusion may bring -- it might end up being a better power solution than anything Intel can offer. I doubt it, but it might happen.

TiVo... I don't know, IMO it seems like TiVo's time has passed. Everybody uses generic "DVR's" now, which usually come from the cable/satellite provider. You don't go to the store and buy a TiVo anymore, you just get what came from the cableco. Of course the brand still has wide recognition, and that might help, but I can't see Apple subsuming the Apple brand to Tivo in such a consumer-facing product.

I agree about Netflix, that could be a good pick-up, although again I can't see Apple keeping with the Netflix brand name. They are both consumer brands. This is why I keep thinking more to hardware and software verticals like AMD where most people don't really care if they have an AMD processor inside their computer. Adobe has a good brand but the product brands (Photoshop) are a lot stronger and in some cases have been around since before they were even Adobe products.

A NAND manufacturer would make sense, although fabs are very expensive.

Yahoo!.... hmmm. I just don't see it happening. Again with the consumer branding thing. I just can't see Apple co-branding.
 
Apple buying AMD would be a big mistake. AMD is still struggling to compete with Intel, and Apple has no expertise to add to AMD. Furthermore, AMD/ATI fights tooth and nail to compete with NVIDIA, and again Apple has no little expertise to add to AMD.

Buying AMD would mean that Apple would suddenly be cut off from both NVIDIA and Intel. Terrible move.

Staying out of it means that both Intel and NVIDIA continue to fight AMD for Apple's business.
 
slashbinslashbash said:
TiVo... I don't know, IMO it seems like TiVo's time has passed. Everybody uses generic "DVR's" now, which usually come from the cable/satellite provider. You don't go to the store and buy a TiVo anymore, you just get what came from the cableco. Of course the brand still has wide recognition, and that might help, but I can't see Apple subsuming the Apple brand to Tivo in such a consumer-facing product.
Click to expand...

The reason I suggested TiVo wasn't for their products rather their IP if Apple is serious about entering the living room and competing with GoogleTV.
 
Good idea about the SSD acquisition.. maybe Apple will purchase SanDisk. Market cap less than 9 billion. They can make cash offer for SanDisk.
 
How about Sprint, market cap about $14B at the moment. Apple loves control over its products and you can't get much more control on your cell phone than owning the only network it can use.

Of course that would mean dropping AT&T and possibly Verizon but I really don't think Apple cares about market share, only profits. And those two things don't always go hand in hand.

-KeithP
 
Eug said:
Apple buying AMD would be a big mistake. AMD is still struggling to compete with Intel, and Apple has no expertise to add to AMD. Furthermore, AMD/ATI fights tooth and nail to compete with NVIDIA, and again Apple has no little expertise to add to AMD.

Buying AMD would mean that Apple would suddenly be cut off from both NVIDIA and Intel. Terrible move.

Staying out of it means that both Intel and NVIDIA continue to fight AMD for Apple's business.
Click to expand...

Also would screw consumers, apple would be unable to remain close to intel and intel would charge outrageous prices. If this happen we would be set back 10s of years in technology.
 
If they're going to buy Netflix, it should be soon, they're growing exponentially.

A NAND manufacturer would fit well.

Doubtful Apple would buy Adobe, too much house cleaning to do.

Is there a display manufacturer that would make sense?
 
The only big name company I can even think of is Yahoo. Everything else is really unrealistic. I might expect them to pick up some companies that are smaller with some IP that we haven't heard of yet.
 
I don't think they are going to buy anything big. "Strategic opportunities" is an excuse to keep the money under Steve's control.
 
Alot of people often just see AMD as the cpu manufacturer that's most always 2nd to intel.

However, AMD as most of us do know also owns ATI. So it's more of a 2 for one deal. Processing and graphics.
 
slashbinslashbash said:
Good stuff there. I had been thinking maybe a gaming company, either EA or Activision Blizzard. Is Valve privately held? It's funny, they mentioned Valve in the event yesterday, and basically what Valve has done is create an App Store for PC games. And Valve seems to fit better with Apple's philosophy overall. Of course the best match would be Nintendo, but Nintendo is too expensive and too Japanese.

My thoughts on what Apple would do with Adobe -- "Fix" Flash and completely re-work it (the client program). Same with Acrobat. Get rid of Premiere, replace with Final Cut Pro on both Mac and PC. Keep After Effects and integrate it with FCP. Keep PhotoShop, Illustrator, InDesign, DreamWeaver.

The AMD thing is kind of a pipe dream, I admit -- there's kind of a chicken and egg problem there. They couldn't switch to AMD until AMD processors got very power-efficient, but AMD might not ever get there by itself without a push from somebody like Apple. Maybe Apple could start putting AMD CPU's into iMacs and other desktop form factors where power consumption doesn't matter as much, but they have to maintain their relationship with Intel. I don't know if they would jeopardize that just to move part of their product line over to AMD. (Not to mention, it adds all kinds of driver issues as they have to deal with totally different chipsets.) Of course, Apple currently uses AMD GPU's, so that's a "foot in the door" for AMD. And who knows what Fusion may bring -- it might end up being a better power solution than anything Intel can offer. I doubt it, but it might happen.

TiVo... I don't know, IMO it seems like TiVo's time has passed. Everybody uses generic "DVR's" now, which usually come from the cable/satellite provider. You don't go to the store and buy a TiVo anymore, you just get what came from the cableco. Of course the brand still has wide recognition, and that might help, but I can't see Apple subsuming the Apple brand to Tivo in such a consumer-facing product.

I agree about Netflix, that could be a good pick-up, although again I can't see Apple keeping with the Netflix brand name. They are both consumer brands. This is why I keep thinking more to hardware and software verticals like AMD where most people don't really care if they have an AMD processor inside their computer. Adobe has a good brand but the product brands (Photoshop) are a lot stronger and in some cases have been around since before they were even Adobe products.

A NAND manufacturer would make sense, although fabs are very expensive.

Yahoo!.... hmmm. I just don't see it happening. Again with the consumer branding thing. I just can't see Apple co-branding.
Click to expand...

I'd just like to point out a lot of major Cable Co's have entered, or will be entering contracts with TiVo for them to produce TiVo DVRs, whole home DVR, and Standalone Cable Boxes. One Cable Co. has already started its rollout, another will in Q4 and several others will being theres in 1H 2011.
 
KeithP said:
How about Sprint, market cap about $14B at the moment. Apple loves control over its products and you can't get much more control on your cell phone than owning the only network it can use.

Of course that would mean dropping AT&T and possibly Verizon but I really don't think Apple cares about market share, only profits. And those two things don't always go hand in hand.

-KeithP
Click to expand...

They'ed never buy Sprint. Sprint has only an okay network, and thats because it piggybacks off of Verizon when you aren't near a Sprint tower. Sprint also invested heavily in the wrong 4G.
 
Pliablemoose said:
If they're going to buy Netflix, it should be soon, they're growing exponentially.

A NAND manufacturer would fit well.

Doubtful Apple would buy Adobe, too much house cleaning to do.

Is there a display manufacturer that would make sense?
Click to expand...

There are not many co's that make panels. The main two are LG and Samsung. Apple isn't going to buy a panel division of either company, because both co's make a killing supplying the majority of all panels for LCDs, TVs, cellphones and consumer products.

Its smarter for apple to buy panels than it is to produce them. Unless there is some small time maker of next gen panels I don't know about.

Apple manufactures ZERO of its own hardware, they design most everything, but they do not manufacture. I do not see them buying hardware manufacturing companies. Why, its cheaper to buy on contract with Apple designing and giving the other company its specs, and then the other company produces the parts for them. Thats why they bought a design firm, and not a fab company for their Ipad/Iphone chips. They still contract the manufacturing to another company in the business of fab'ing chips.

Apple will not buy a hardware manufacturer, so you can nix anything hardware related that is about manufacturing and not design.
 
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Wreckem said:
There are not many co's that make panels. The main two are LG and Samsung. Apple isn't going to buy a panel division of either company, because both co's make a killing supplying the majority of all panels for LCDs, TVs, cellphones and consumer products.

Its smarter for apple to buy panels than it is to produce them. Unless there is some small time maker of next gen panels I don't know about.

Apple manufactures ZERO of its own hardware, they design most everything, but they do not manufacture. I do not see them buying hardware manufacturing companies. Why, its cheaper to buy on contract with Apple designing and giving the other company its specs, and then the other company produces the parts for them. Thats why they bought a design firm, and not a fab company for their Ipad/Iphone chips. They still contract the manufacturing to another company in the business of fab'ing chips.

Apple will not buy a hardware manufacturer, so you can nix anything hardware related that is about manufacturing and not design.
Click to expand...

Apple A4?
 
Foxconn makes a lot of money from just PC Products and generic stuff.. it wouldn't play well..

I found it interesting that Facebook was listed on a blog post about an acquisition .. all I have to say is LOL. Maybe Apple can apply some actual security to the site that half a million people use everyday.

Sony could make sense but I believe they are flag-shipping Google TV (TVs and set tops) which doesn't jive either.

I'm taking back my Netflix standing.. based on a few new reports of financials.. if they kill or severely cut back on DVD rentals.. they could definitely be a good asset.



They seem to target small design and software firms with tons of IP potential.
 
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A new rumor about the acquisition of Sony by Apple is driving up Sony's stock today.

I would be shocked if Apple acquired Sony.
 
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