Apple sits on about $140-billion in cash, the result of six years of the iPhone’s major disruption of the tech industry. What should Apple do with all that money?
Everyone has a long list of what Apple should buy, including me. Putting $10-billion into developing video content for Apple TV would be a good start. What’s interesting about this embarrassment of riches is who came up with the craziest of ideas. Here’s a good reason not to trust people tied into the stock market.
Buy This! No, Buy This! Or, Please Don’t
Apple has so much money that the company has become a lawsuit magnet. No, not the patent trolls who crawl out of sewer and setup shop in East Texas to put the squeeze on our favorite Cupertino company.
That kind of sleazy activity has been around forever and isn’t likely to go away any time soon. Apple is a big, rich target for anyone who can spell p-a-t-e-n-t.
No, I’m talking about sleaze balls of a different color. Hedge fund manager David Einhorn is suing Apple so his company can get more of what Apple has already earned.
Apple hasn’t helped the situation, either, after declaring that it has more money than it needs to fund future operations. No, I’m not talking about Einhorn and his lawsuit to pry money from Apple’s digital mattress.
The latest to offer up an assessment of Apple’s shopping list is Mad Money fiend, Jim Cramer. He’s critical of Einhorn’s lawsuit, of course, and he has a list of better ideas to prop up Apple’s ailing stock.
What should Apple buy? Twitter. Or, Netflix.
Buy Something Stupid
Yes, Apple should buy a company that doesn’t make any money and doesn’t have much prospect for ever making much money. Or, Apple should buy a company that does some of what Apple already does. Content distribution.
Apple can afford either one. Actually, the company can afford both, and still have enough money to put a healthy down payment on Samsung. The question that should be asked is, why?
What is attractive about Twitter? Apple already has more customers than Twitter has members (or, rather, followers– most Twitter users don’t actually tweet; they follow). It’s likely that the vast majority of Twitter users are already Apple’s customers.
Twitter brings no value to Apple.
What about Netflix? This scenario is more interesting, though easily dismissed. Both are in the media content distribution business, but Apple sells media all over the world, while Netflix is a mostly U.S. operation. Apple already has distribution technology so Netflix doesn’t bring much to that table. Apple could easily do what Netflix does– with the right agreements from content producers. Would those agreements stay with Netflix if Apple bought the company?
And, like Twitter, it’s likely that most of Netflix’s customers are already Apple customers, so what does Apple gain with a purchase? Yet, that’s the suggestion from Jim Cramer to help boost Apple’s stock. That alone tells me that the stock market is rigged and manipulated and not based on math. It’s an emotional beast.
Amazon reports terrible numbers (and no numbers about the Kindle world), and the stock goes up. Apple reports the highest profits in corporate history, and the stock goes down. What’s wrong with that picture?
I’ll concede that Jim Cramer, like the charlatan at Business Insider, Henry Blodget, knows more about market dynamics than this Brooklyn bred girl. The stock market is so warped and convoluted that Apple’s stock just might go up if the company announced some crazy-assed non-accretive purchase instead of a giant stock buy back. If so, what’s the craziest thing Apple could do with all that money in an effort to stimulate the stock?
First, that goes against Apple’s culture. Focus has always been on product and user experience, not stock price manipulation. Second, Apple is better at leveraging assets, and neither Twitter nor Netflix bring to Apple what the purchase of P.A. Semi brought in 2008.
Yet the stock market seems to think Apple must do something they think is brilliant to move the stock when the suggestions are actually hairbrained. Hairbrained? Mark Cuban took a few billion dollars from Yahoo! when he sold Broadcast.com despite the fact that the company never made much money and revenue was pitiable by Apple standards. What happened to Yahoo!’s stock? It went up.
About Kate MacKenzie
I want to see Apple buy a company that’s not hardware-related. Maybe acquire Visa or some search engine like Duck Duck Go. I’d like to see Apple’s share price go back up to $700, stay close to there and increase the dividends a bit. That’s all I’m asking. I don’t know if Apple really needs to do these things but I feel the company could be a little more aggressive with its cash just to shut up many of those unhappy investors.
I’m hoping Apple will fund producing of media content like Netflix and Amazon are doing and also get into the subscription streaming service business. It seems as though Apple will eventually have enough data centers to handle the load. It just seems as though Apple can do so much with that cash and to let it do almost nothing just seems to be a waste.
Apple doesn’t make big, bold moves when it comes to buying other companies. Netflix and Twitter are stupid ideas which make no sense. Cramer must get paid by the stupid idea.
What I want to see is bold new products. Television? Nah. Bah humbug. Been there. Done that. Now, an Apple TV subscription service with enough content to replace Cable TV? I’d buy that. Or, maybe as good, put a DVR into an updated Apple TV. I want it, but Apple is afraid of the cable companies.
Buy back all the stock and go private. That’ll shut up all the investors that perform stock manipulation and don’t give a patooty about Apple.
And where exactly will Apple get the $500-billion they’ll need to perform the buyout? Of course, Kate asked for a hair brained idea, and that’s what she got.
Too many people mention Twitter. What apple really wants to do is bring forth a new TV idea/system. About 70% of their cash is overseas. My guess is they are going to buy, or build out a world class fiber optic data operation for their own TV system. I think thats one way they can get the government to give them a break to bring some of that money back, creating new jobs. Comcast and Time Warner would go ballistic. Or, maybe Apple might buy one of them.
I’d like to see some type of R&D and the manufacture or purchase of a chip fab company (tens of billions, which is more than any other company could afford). Design a new chip that can’t be made by anyone else. Couldn’t an entire phone (computer) be designed on one chip? (minus screen, battery and mechanical things like speaker and microphones) Also a 4 to 5% dividend would make AAPL a more solid investment.