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Apple’s $200B war chest ramps up acquisition talk

Apple’s $200B war chest ramps up acquisition talk

Christmas is days away, but that hasn’t stopped people from drawing up Apple’s shopping list  for 2016. Sitting on $200 billion in cash and eager to fill gaps in its product line, Apple (AAPL) may find it irresistible not to snap up a company or two, say analysts, mindful of Apple’s war chest and growing concerns that iPhone growth could taper next year. Those concerns have helped drive Apple’s stock down nearly 6% this month.1411279189000-Apple-iPhone-Blai-1-

There are plenty of candidates, says Daniel Ives, an analyst at FBR Capital. He foresees a “Christmas M&A list” that includes GoPro, Box, Adobe and Tesla Motors. The most likely candidates strategically are Box (BOX), a cloud-based file-sharing service for large businesses, and GoPro (GPRO), a maker of action cameras, according to Ives. Both could fill technology gaps for Apple as it tries to diversify its lineup beyond phones, watches, laptops, tablets and more. Indeed, shares of GoPro climbed 11% in a session last week on Ives’ report.

Representatives from Apple, Tesla (TSLA) and GoPro did not reply to email messages. Adobe (ADBE) and Box declined to comment for this article. Ives readily admits the report is highly speculative, but he does raise a point: “Apple needs to double-down on the enterprise, and it is in prime financial shape to do it,” he says. “With so much cash in the coffers, and growing, we can finally envision Apple making a large acquisition” to “building out new technology growth” for the next decade, Ives said in an interview. By the end of 2016, Ives estimates Apple will have $250 billion to $300 billion in cash.

Tesla has garnered the most attention, and subsequent “no comments” from Apple, as a possible acquisition target. As much as its name has been bandied about, and despite Apple’s clear interest in the auto industry — it has hired a number of former car executives and specialists — it remains an M&A long shot. Apple has shied from splashy acquisitions — until it laid out $3 billion for Beats Electronics in 2014 to reaffirm its place in the digital music space it helped define with iTunes. (One could argue Apple’s $400 million purchase of NeXT Software in late 1996 landed its co-founder, Steve Jobs, in the deal, but that’s another story.) “Apple did it with Beats (for music), and it can do it again,” says Chris Sullivan, CEO of Gazelle, which buys and sells used electronics such as iPhones, iPads, MacBooks and Galaxys.


December 2017
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