October 19, 2010
Amid news of stellar financial results this week, Apple announced that it had added another $5 billion in cash to its already teeming coffers fo a total of $50 billion. When asked about returning some of that money to shareholders,, Steve Jobs noted that it would rather keep its “powder dry” (invoking the maxim attributed to Oliver Cromwell..
Apple, though, does not have a history of large acquisitions like its rival HP, which has amassed its own private technology company history museum by scooping up such pioneering companies as Palm ($1.2b), 3Com ($2.7b) and Compaq ($25b). In contrast, Apple’s high-profile acquisition of NeXT, which brought Jobs back to Apple and laid the foundation for the future of the Mac, was only $429m (about $581m today). This begs the question, what would Apple buy that would possibly cost that much?
Not a competitor. Looking across the value chain, Apple already has its own processor. About the only critical delivery piece it does not own today is a network – perhaps a telco or something to deliver landline content like a cable or satellite company (or equivalent). Despite the predictable uptake in Apple TV sales following its price reduction, Jobs has previously bemoaned the “go to market” problem of getting content to the television Of course, the companies that are out there delivering these pipes today are all either regional (like Comcast) or infrastructure-challenged (like Dish Network); it might be more efficient for Apple to build its own network as Google has been doing for some time although I’m inclined to think that it would prefer something wireless.
As I was writing this, I saw that Peter Kafka at MediaMemo has speculated that Apple might buy Facebook. I could see tremendous synergy there. Apple hasn’t cracked the social media nut, and buying Facebook would provide no only a tremendous online hedge against Google, but a fantastic complement to Apple’s mobile, music, games and college businesses. Hey Facebook, how about sweetening the deal by developing an iPad app already?
Tags: acquisitions, Apple, Facebook, fiber, mergers, MSOs, networks, satellite, the social network