According to analysts at Citi, the US bank, there is a 40 per cent chance that Apple will buy Netflix.
The rationale is simple. President Trump is cutting US corporation tax, and therefore, Apple will bring a big chunk of its $252 billion cash pile back home.
So, what will it do with the money?
Jim Suva and Asia Merchant at Citi have looked at potential corporate targets.
They rate Netflix as the most likely target – projecting a 40 per cent chance. Then they have Disney, putting the odds of Apple buying the Micky Mouse company at around 25 per cent. There is history here. Steve Jobs used to own Pixar, and was once the biggest shareholder in Disney. But the Citi report was produced before the planned Disney purchase of Fox was announced.
Other candidates include Electronic Arts, Activision, Take-Two, Hulu and Tesla.
But it has the odds of a takeover of Tesla as quite low – around 5 per cent.
The snag is a lot of these companies are very expensive. Netflix is trading at a ratio of profits to valuation of around 200.
Sure Apple, can afford the $87 billion that the company is valued at – it could afford a big margin on this. In fact, it could afford to buy all the companies listed above. Their combined market cap is as follows
Disney: $168 billion
Tesla: $53 billion
Netflix: $87 billion
Activision: $48 billion
Electronic Arts: $34 billion
Take Two Interactive: $13 billion
Hulu: owned by Disney, Fox, Comcast and Time Warner
Total (excluding Hulu): $403 billion
So, Apple would need to borrow around $150 billion.
Or it could hand the money back to shareholders, give it to Bob Geldof, or even give it you and me.
Corporate takeovers are likely, although Apple has never been a big spender. It does seem to lag behind in the field of AI, though. `
