A report has suggested that there might be a 40% likelihood that Apple will acquire the video streaming media company, Netflix. A move more likely possible due to the US corporate tax cut law, according to Citi analysts Jim Suva and Asiya Merchant.
You would recall that President Donald Trump had earlier signed a federal tax law, which slashed the federal corporate tax rate from 35% to 21% and allow a one-time repatriation of overseas cash, a move which would most likely favour top US companies. The question had been, ‘what will these big companies do with all the money they can bring back to the US’? – investment of course.
Apple has about $252million in cash, much of which is outside US jurisdiction. With its ability to bring them back to the US, you would expect huge spending on investment by the company. Hence the Citi analysts Jim Suva and Asiya Merchant has suggested the 40% likelihood of acquiring Netflix.
On why Citi analysts thinks Apple would want to acquire Netflix, they said “Apple has for years struggled to offer a compelling TV or movie offering. iTunes has been a huge hit for the company, but viewers have migrated increasingly to services like Netflix, Amazon or Hulu to watch their favourite shows”. The report further noted Apple recently dipped a toe into its first scripted video series featuring Jennifer Aniston and Reese Witherspoon. “But making hit movies is a very different skill-set from making the iPhones they are viewed on, so there is some logic to the idea that Apple might want to own Netflix in the future”.
The analyst affirmed that Apple “has too much cash – nearly $US250 billion – growing at $US50 billion a year”. With such huge amount at Apple’s disposal, it would need only a third to buy Netflix, whose total assets is $13.6billion, as at 2016.
Apple was founded by Steve Jobs, Steve Wozniak, and Ronald Wayne on April 1, 1976, to develop and sell personal computers. It was incorporated as Apple Computer, Inc. on January 3, 1977, and was renamed as Apple Inc. The American multinational technology company designs, develops, and sells consumer electronics, computer software, and online services. Its hardware products include the iPhone smartphone, the iPad tablet computer, the Mac personal computer, the iPod portable media player, and the Apple Watch smartwatch. Apple’s consumer software includes the OS X and iOS operating systems, the iTunes media player, the Safari web browser, and the iLife and iWork creativity and productivity suites. Its online services include the iTunes Store, the iOS App Store and Mac App Store, and iCloud. Apple is headquartered in Cupertino, California.
Netflix is an American entertainment company founded by Reed Hastings and Marc Randolph on August 29, 1997. It specializes in and provides streaming media and video-on-demand online and DVD by mail. In 2013, Netflix expanded into film and television production as well as online distribution. Netflix’s initial business model included DVD sales and rental, although Hastings jettisoned DVD sales about a year after Netflix’s founding to focus on the DVD rental by mail business.
In 2007, Netflix expanded its business with the introduction of streaming media, while retaining the DVD and Blu-ray rental service. The company expanded internationally, with streaming made available to Canada in 2010 and continued growing its streaming service from there; by January 2016, Netflix services operated in over 190 countries. The company currently have 109.25 million active users worldwide and is headquartered in Los Gatos, California, USA.