Check out the image above. It’s the Apple logo from the last century; which Steve Jobs changed after he returned in 1997 to lead Apple from the brink of disaster. Notice the color on top? Green. Apple is all about money. Great products and customer service, yes. But money is important to Apple. It’s past time for Apple to spend some of those hard earned dollars.
What Would I Buy?
Despite a rapidly growing services division, Apple remains mostly a hardware company. That’s where the revenue and profits are. Hardware. Even Apple’s services would be nothing without hardware, which has helped the company spend billions to buy back stock and pay out dividends, and still have about $200-billion in the bank.
It’s not that Apple doesn’t spend money. Beats headphones and music cost around $3-billion. Apple has invested billions more in China, India, and elsewhere as the company’s fortunes expand. Historically, Apple makes smaller investments which are more tactical than strategic in nature. Apple bought P.A. Semi just about nine years ago and the result is Apple’s own in-house designed CPUs for iPhone and iPad (and now, Apple Watch, AirPods, and Beats earphones).
Last year Apple spent $200-million on a machine learning company, and hundreds of millions more on companies that provide analytics, 3D sensors, micro-LED displays, authentication and security, and plenty more on maps technologies. It’s not as if Apple hasn’t gone out shopping. It has. Other than Beats Electronics, everything else is chump change.
What would you buy if you ran Apple? Here’s a list of some good an some bad.
Tesla – this is my favorite. Apple should have bought Tesla years ago, and it’s still affordable now. Tesla is the Apple of the automobile industry. Whatever Apple is doing on its own with electric cars or autonomous vehicles hasn’t been visible– other than the negative stories of complete disarray and chaos.
Music – Pandora, Spotify, or whatever else competes with Apple Music. These would be bad buys. None of those companies make much money. Apple can afford to play the long game without an investment.
Netflix – It may be too late. Netflix is becoming the Apple of the streaming media business, and remains affordable with a market cap just over $60-billion, but Apple likes to roll their own, and that explains why it trails Spotify, Netflix, and other media giants. Buy Netflix, Apple, and move on.
Adobe – I have always liked this idea. Adobe is well run, competitive on all platforms, and makes money, so a purchase would be accretive to Apple’s bottom line, and set the stage for further differentiation between Mac, iPhone, iPad apps, and the rest of the world. But where’s the future? Apps? Or streaming media? Buying both Adobe and Netflix is a pricey venture, even for Apple.
Cheap – Sirius XM satellite radio is cheap. Dirt cheap. And Warren Buffet bought the stock. Sirius would put Apple into a strong position as an entertainment giant. Samsung bought Harmon, and that was cheap, and could have given Apple a road to the auto industry. Also cheap and available are FitBit and VeriFone (a good way to get Apple Pay everywhere). What’s missing from this list are companies that make HomeKit devices, so that remains a fragmented industry.
Disney – Sure. Why not? Disney is worth about the same as all of Apple’s cash, has a decent P/E ratio, and would make Apple a content giant overnight. But Disney would be a big fish to swallow.
What did I miss?