Why isn't Apple acquiring Netflix

Apple: is the iPhone company buying Netflix?

Apple has nearly $ 250 billion in liquid funds on the high edge. After deducting the debt, the net cash amount is still $ 130 billion. That is what J.P. Morgan prompted three potential strategic acquisitions for Apple to be discussed. One of them would be Netflix.

Apple has a mountain of nearly $ 250 billion in cash. According to J.P. Morgan is one of the ways the tech giant could capitalize on the cash by acquiring Netflix to bolster Apple's position as a video content provider.

"We believe Netflix is ​​the best strategic solution for a leadership position," said J.P. Morgan analyst Samik Chatterjee. "We see it as creating value to acquire the most successful player in this area, which is difficult to copy by a smaller player in this market."

Chatterjee notes, however, that buying Netflix would likely require a substantial premium. If that premium were 20 percent, Apple would probably have to put $ 189 billion on the table, the analyst speculates. Netflix has a current market value of $ 148 billion and $ 7 billion in net debt.

The J.P. Morgan analyst sees three industries that would be well suited for Apple to make strategic acquisitions and names two other companies in addition to Netflix: Activision Blizzard and Sonos. This is speculation by Chatterjee, but it will come as Apple's long-term growth from the iPhone begins to wane. Chatterjee even specifically notes that the Apple-Netflix combination is unlikely.

While Chatterjee said that it would be costly for Apple to buy Netflix, he gave three reasons why the streaming service would be the best fit for Apple. First, Netflix fits Apple's preference to be a "content aggregator" rather than a traditional media company. Second, the Netflix subscription model fits Apple's services division, and third, Netflix would be easier to acquire than Hulu and Amazon Prime. J.P. Morgan believes Apple needs to buy rather than launch its own streaming service.

Too expensive, too atypical

Apple is financially well equipped to make massive acquisitions. However, with such a large acquisition, Apple, or rather Apple management, would deviate massively from the previous approach. So far, Apple has mainly been noticed by adding small, specialized technology companies to its portfolio. A takeover of Netflix, as well as the business model would suit Apple, is unlikely. The same applies to Activision. J.P. Morgan's research note is more likely to serve to grab attention. It is most likely that Sonos fits into Apple's loot scheme. With Beats, Apple has already successfully integrated a manufacturer of complementary products (headphones) into its own portfolio.

Apple in a peer group comparison:

More promising than in a long time

Apple stock is working on its comeback. The current rating leaves room for improvement. With a 202 P / E ratio of 12, the value is cheaper than it has been for a long time. In the opinion of the SHAREHOLDER, the share remains a buy.


Note on possible conflicts of interest:

The chairman of the board and majority owner of the publisher Börsenmedien AG, Mr. Bernd Förtsch, has taken direct and indirect positions on the following financial instruments mentioned in the publication or related derivatives that will benefit from any price development resulting from the publication: Apple.

The author holds positions directly on the following financial instruments addressed in the publication or related derivatives that benefit from any price development resulting from the publication: Apple.



Book tip: Tim Cook

Steve Jobs dies in 2011. Everyone agrees that without him, Apple is doomed. Jobs' successor Tim Cook is seen by many to be the wrong choice - too little innovative, too little glamorous. But Cook proves: He is the right man at the right time. Under his leadership, the iPhone becomes the most successful product of all time, the service business is growing rapidly, and Apple becomes the world's first trillion dollar company. Leander Kahney is now presenting the first ever biography on Tim Cook. Who is the man who many think is a bore, really? How did he change Apple and where else does he want to go? What challenges will he have to face in the future? And will he be able to keep Apple at the top?

Authors: Kahney, Leander
Number of pages: 320
Release date: 05.07.2019
Format: Hardcover
ISBN: 978-3-86470-651-6