Apple's $18 billion shopping spree?
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| Mint CEO Aaron Patzer isn't itching to sell his online budgeting service, but a company like Microsoft would do well to buy it anyway. |
No one's said much about it, but there it was, plain as day, in Apple's (AAPL) earnings call this week: Chief Financial Officer Peter Oppenheimer said the 'A' word.
Acquisitions.
When an analyst asked what Apple would do with more than $18 billion in cash it's sitting on, Oppenheimer downplayed the possibility of a major stock buyback, and hinted that Apple could go shopping instead. "Our preference," he said, "continues to be to maintain a strong balance sheet in order to preserve our flexibility to make strategic investments and/or acquisitions."
Which is a fine segue to my piece in the latest issue of Fortune, which seeks to tackle the issue of what, exactly, Apple and others should do with their growing stacks of Benjamins. Among my recommendations: Apple should buy a green startup, Microsoft (MSFT) should buy Mint, and Google (GOOG) should buy TiVo (TIVO).
Though Apple normally doesn't buy many companies, I suggest 2008 might be a good time for Jobs & Co. to throw some money around. (Same goes for Microsoft and Google, which do a lot more spending than Apple.)
Apple should buy Sandisk and get their flash on the inside instead of paying retail. Sure, Steve Jobs gets a good deal from his flash providers, but not like the deal he'd get if he owned the company!
I know it's passe now, but I think AAPL should still buy Tivo. My the natue of both companies' OS's the AppleTV OS would be portable to the Tivo platform so they could offer free upgrades to existing subscribers, and they could also leverage Tivo's Amazon Unbox deal (assuming it would still be in place ). Apple could then kill all intrusive advertising deals Tiv has, and that would make the customer base very happy. Apple would be viewed as liberators!
For what it's worth, they say the same thing on almost every quarterly call about their cash reserves.
From Jon Fortt: They say they like the flexibility for investments. But they usually don't explicitly say "acquisitions." Might be significant, might not.
MSFT should spend their dough improving the quality of their existing products; Vista needs a needs a retool and Xbox 360, although awesome, rarely last more than 6 months before the hardware burns out. Spend for quality.
Nidack,
Yes and no, the valuation of a company involves both the current results and future expectations. It's a bit of a Ying Yang, monster current numbers sometimes overshadows week future expectations and sometimes it's vice versa.
I know it's sort of a canned scenerio but let's say you expect 10% quarter to quarter growth for the next 4 quarters. Now you release and you go, hey we beat our 10% and actually got 15% and BTW we only expect 5% growth per quarter for the next 3, so over the course of the year you were expecting 40% growth, now it's on 15+5+5+5 or 30%.
Apple just posted their best quarter in their history and their stock plummeted after that because Apple went conservative on their next quarter predictions.
Microsoft had an OK quarter but instead decided to give a positive prediction for the next quarter and their stock went up.
Go figure.
So if Apple blows their predictions out of the water next quarter, but gives a conservative outlook on the next quarter after that will their stock continue to plummet even though on paper they are kicking serious butt?
If Microsoft doesn't meet their predicted sales for the next quarter, but gives a positive outlook for the quarter after that will their stock go up again?
I always thought if you beat your predicted sales your stock goes up. I guess now you aren't judged on what you do but what you might do in the worst case scenario.
Some think that Apple has signaled the start of the recesion with their forcast and they might be right. If all the doom and gloom predicted comes true should Apple to out and blow all their cash on buying some company?
Great article, I bet YHOO, ADBE, LOCM and MCHX all get offers this year. TIVO has great brand awareness but don't like the future, a bit like Netflix, great at the time but new tech will take over share
One of the most relevant questions I could think of at a time when Apple sits cash rich and in market transition that I believe will prove very profitable for the company and it's future.
Audible (ADBL)