What about Services and Wearables? The former would hit the Top 75 and the latter, the fastest growing Apple product group, would weigh in to the Top 150, too. Yes, Apple makes Fortune 500 companies. So, why doesn’t Apple buy a few?
Historically, Apple does not make many big business deals where it buys a company of considerable wealth and stature. There are some big names on Apple’s acquisition list, but none the likes of a merger. Apple bought Steve Jobs’ NeXT for $400-million. It took a decade later to get close to that amount when it bought P.A. Semi, the semiconductor design group that pumps out Apple’s iPhone and iPad chips. Cheap at $278-million.
I bring this up because we are starting to see some consolidation in various industries, especially in one where Apple has just dipped its toe. Content development. CBS and Viacom have agreed to become ViacomCBS in a $30-billion deal. Apple could afford that. Netflix market cap is barely $135-billion. Apple could afford that.
Instead, Apple tends to buy smaller companies that have technology or personnel that fit well into whatever plans the company has for the future. Some of those don’t pan out well. Apple paid $275-million for Quattro Wireless’ mobile tech business, and another $500-million for Anobit’s flash memory business.
Remember Touch ID? That technology came from AuthenTec and took $356-million from Apple’s cash pile. Beats Electronics took over $3-billion, Apple’s largest expenditure ever. $400-million for Shazam. %600-million for Dialog Semiconductor. Obviously, Apple wants to design and build its own chips, hence the $1-billion price tag for Intel’s modem business.
Unless you count NeXT, you don’t see Apple engaged in mergers and acquisitions tend to be strategic in nature.
Yet, Apple sits with over $100-billion in cash and still doles out tens of billions in cash to shareholders in dividends and buys similar amounts of stock to take shares off the market.
Apple can afford to buy the future but seems intent and content on just giving money away to undeserving shareholders who do little for the company’s fortunes.
Why doesn’t Apple buy TSMC, the Taiwan-based chip manufacturer? Why doesn’t Apple buy a display manufacturer? Unlike Samsung, which prefers to make nearly every component itself, Apple tends to let the market decide the next generation of components, then buy what it needs when it needs it, rather than investing in the future with its own hardware manufacturing capability.
Apple could afford to buy the future but gives money away instead, and for that, executives are rewarded with great bonuses and stock grants.
Is it safe to say this would not have happened under Steve Jobs’ watch?