Apple in position to increase acquisition activity in 2010 - report

Posted:
in General Discussion edited January 2014
With a war chest of $23 billion in cash, along with increasing competition by Google, Apple looks to continue its recent trend of acquisitions in the new year.



While Apple has acquired only 11 small companies since the return of Steve Jobs in 1997, three of those have been in the past five months, indicating an increased emphasis by the company on acquisitions. By comparison, Google has acquired 11 companies in the last 18 months.



According to BusinessWeek, Apple has begun to use its large stores of cash to help it acquire small, innovate startups that will help broaden its position in the rapidly changing technology market.



"There are obvious strategic reasons Apple might want to become more acquisitive. The company is moving beyond its traditional base in personal computers and charging into smartphones and mobile computing. As mobile computing takes shape, Apple, Google, Nokia, and other traditional tech titans have become more active in searching for startups that can help them with the new terrain. In Apple's case, it has a war chest of $23 billion in cash and short-term securities to pursue acquisitions," writes BusinessWeek.



In the past, Apple reportedly had no organized merger and acquisition strategy, instead executives would bring potential deals directly to Jobs, who had final say.



According to BusinessWeek Apple's "ad-hoc" approach to acquisitions is what cost the company a potential deal with mobile advertising firm AdMob. Instead the company was acquired by Google.



Last year, Apple hired Adrian Perica, a specialist in mergers and acquisitions. He is reportedly the first specialist of this type at Apple. In the wake of Apple's lost bid for AdMob last year, Perica was brought in to make sure that Apple did not make the same mistake again.



Music streaming service Lala was acquired last December by Apple, in an uncharacteristically quick deal taking weeks instead of months. Apple reportedly learned its lesson, "It was clear that Apple didn't want to lose out again, and especially not to Google," writes BusinessWeek.
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Comments

  • Reply 1 of 50
    Did we learn something new here..............(checks again).............nope.
  • Reply 2 of 50
    mactelmactel Posts: 1,275member
    I could have sworn Apple has $30+ billion in in cash and investments.
  • Reply 3 of 50
    mactrippermactripper Posts: 1,328member
    Quote:

    "It was clear that Apple didn't want to lose out again, and especially not to Google"





    With all competition Google is giving Apple lately, one would suspect they are now competitors.







    But I ran across this little tidbit about Eric Schmidt CEO of Google and former board member at Apple.





    Quote:

    Schmidt held a series of technical positions with IT companies, including Bell Labs, Zilog and Xerox?s famed Palo Alto Research Center (PARC).





    PARC was the place where the GUI and mouse was invented and Steve Jobs took that idea (being allowed to tour the technology) and formed the Macintosh and the graphical user interface which forever changed how we interact with computers.



    So it looks like the two go wayyyyy back. Was Eric part of the early Apple Computer team?



    So I'm thinking the two are more like carving up the world together against Microsoft than being real competitors.
  • Reply 4 of 50
    quadra 610quadra 610 Posts: 6,744member
    Wasn't it around 34 billion?
  • Reply 5 of 50
    yvo84yvo84 Posts: 84member
    It's really starting to sound like Apple and Google are no longer friends.
  • Reply 6 of 50
    mactelmactel Posts: 1,275member
    Quote:
    Originally Posted by Quadra 610 View Post


    Wasn't it around 34 billion?



    Exactly, that's what I thought.
  • Reply 7 of 50
    Quote:
    Originally Posted by Quadra 610 View Post


    Wasn't it around 34 billion?



    It is 34B+ in cash equivalents. Left out LT deposits/securities which have a maturity longer than 1 year. Short-term interest rates are near zero, so Apple moved into longer dated govt/agency bonds for more yield.
  • Reply 8 of 50
    isaidsoisaidso Posts: 750member
    Quote:
    Originally Posted by yvo84 View Post


    It's really starting to sound like Apple and Google are no longer friends.



    Yes, because if it didn't ""Sound"" like that, the media would not be doing their job.
  • Reply 9 of 50
    Quote:
    Originally Posted by Quadra 610 View Post


    Wasn't it around 34 billion?



    Quote:
    Originally Posted by Turley Muller View Post


    It is 34B+ in cash equivalents. Left out LT deposits/securities which have a maturity longer than 1 year. Short-term interest rates are near zero, so Apple moved into longer dated govt/agency bonds for more yield.



    Yeah, in other words, it's $34B. That's as of Oct 2009. I'll bet it's closer to $40B now.



    PS: Just clarifying what you're saying, Turley Muller, since some might wonder if you meant something more subtle in the latter part of your quote.
  • Reply 10 of 50
    Quote:
    Originally Posted by AppleInsider View Post


    .....Apple has begun to use its large stores of cash to help it acquire small, innovate startups ....



    As long as they continue to be small, innovative, non-public targets, go for it, Apple! Well-executed A&D can be as good as R&D.



    Much as I doubt it will ever happen, I do hope that Apple stays disciplined along these lines, and doesn't surprise us with a large, public-target acquisition.
  • Reply 11 of 50
    dreyfus2dreyfus2 Posts: 1,071member
    Apple will never buy anything they can't swallow. Apple is a pretty small company (by staff numbers), major acquisitions could damage the corporate culture in no time (I have seen this happening many times). They would never e.g. go for Adobe. Adobe developers would outnumber Apple's own developers, and keeping everything that is dead wrong with Adobe today from spilling over into Apple would fail.



    The financial crisis is not over. Apple will sit on most of the cash for quite some time.
  • Reply 12 of 50
    I agree that Apple should not be making any major acquisitions, now or in the future, but they're not holding on to so much cash because of the financial crisis. It's not like they're going ever have an opportunity to spend that much money responsibly.
  • Reply 13 of 50
    Hmmmm. That WOULD take care of the that pesky IP lawsuit now wouldn't it?
  • Reply 14 of 50
    Quote:
    Originally Posted by dreyfus2 View Post


    Apple will never buy anything they can't swallow. Apple is a pretty small company (by staff numbers), major acquisitions could damage the corporate culture in no time (I have seen this happening many times). They would never e.g. go for Adobe. Adobe developers would outnumber Apple's own developers, and keeping everything that is dead wrong with Adobe today from spilling over into Apple would fail.



    The financial crisis is not over. Apple will sit on most of the cash for quite some time.





    I agree, Apple made a bundle during the credit bubble, but now it's time to dig the drenches and conserve and wait out this prolonged recession.



    6-7 years before we pull out by my estimates of past recessions behavior and the recent leveling of the unemployment rate at 10% . (just think this recession is twice as severe as the last one and you get the idea from the chart)



    http://farm4.static.flickr.com/3405/...9e0bee32_o.jpg





    Hopefully with the iSlate Apple will attempt to increase it's market share of computers with a lower margin device, but not make it appear it's a lower margin product. Usually this means one part new product spin and one part feature reduction. (new iSlate, no keyboard, mouse, hard drive or superdrive, fits perfectly)
  • Reply 15 of 50
    One thing to keep in mind is that Apple now has a lot of cash overseas. I'd like to see this asked in the next shareholder meeting. As much as 50% could be held abroad. If this is the case, Apple would either need to repatriate the money before making a domestic acquisition or leverage the foreign investment.



    Still, it's a buttload of cash they're sitting on...and at some point will need to do something with as investors want to invest in Apple as a business, not invest in the cash that Apple is holding. If they wanted to do that, they'd just put the money where Apple puts its cash.



    I'd like to see Apple buy Adobe. There's a lot Apple could do with this, but even if Apple were to simply keep it as an independently run subsidiary, it would be worth doing. Take a look at the price to earnings ratio of Adobe. It's higher than Apple, but historically has been lower, and is still much lower than the return Apple is getting by sitting on its cash In other words, if Apple were to take $18 billion and buy Adobe, but do nothing but hold on to Adobe as an owner, they'd get a higher return than they're currently getting by sitting on that $18 billion.



    But Apple could allow Adobe to be run by current management, but require moves to benefit Apple...such as making sure first releases are available on the Apple platform. Apple also wins by gaining patent/IP from Adobe, and could do some amazing stuff with software bundles.
  • Reply 16 of 50
    mactelmactel Posts: 1,275member
    Quote:
    Originally Posted by macslut View Post


    One thing to keep in mind is that Apple now has a lot of cash overseas. I'd like to see this asked in the next shareholder meeting. As much as 50% could be held abroad. If this is the case, Apple would either need to repatriate the money before making a domestic acquisition or leverage the foreign investment.



    Still, it's a buttload of cash they're sitting on...and at some point will need to do something with as investors want to invest in Apple as a business, not invest in the cash that Apple is holding. If they wanted to do that, they'd just put the money where Apple puts its cash.



    I'd like to see Apple buy Adobe. There's a lot Apple could do with this, but even if Apple were to simply keep it as an independently run subsidiary, it would be worth doing. Take a look at the price to earnings ratio of Adobe. It's higher than Apple, but historically has been lower, and is still much lower than the return Apple is getting by sitting on its cash In other words, if Apple were to take $18 billion and buy Adobe, but do nothing but hold on to Adobe as an owner, they'd get a higher return than they're currently getting by sitting on that $18 billion.



    But Apple could allow Adobe to be run by current management, but require moves to benefit Apple...such as making sure first releases are available on the Apple platform. Apple also wins by gaining patent/IP from Adobe, and could do some amazing stuff with software bundles.



    They could finally bring Flash to the iPhone and drop Aperture for Lightroom.
  • Reply 17 of 50
    mactelmactel Posts: 1,275member
    Quote:
    Originally Posted by masternav View Post


    Hmmmm. That WOULD take care of the that pesky IP lawsuit now wouldn't it?



    Kodak does have complimentary consumer devices and a number of patents that would most certainly benefit Apple. The patents could also be used against Nokia. If Nokia wins then Apple could pay them over a billion dollars in triple damages. Kodak is currently worth $1.3 billion. It would be a smart move especially after the fact that Kodak has trimmed much of their deadweight off.
  • Reply 18 of 50
    Quote:
    Originally Posted by macslut View Post


    ...I'd like to see Apple buy Adobe. There's a lot Apple could do with this...



    Care to elaborate what?



    Apple has Quicktime so it doesn't need Flash, just expand Quicktime, done.



    Apple can make better software than Adobe, so they don't need that. Adobe's stuff is insecure as all heck or very old, like Photoshop, a new rewrite is needed. Then Apple has Aperture, expand that. Why pay?



    Apple could grab the desktop publishing market, but that would be a act of mercy, it's not worth spending all that money for since Apple is concerned with making consumer hardware not pro software too much.



    PDFs? Chump stuff for Apple to duplicate, don't need to buy it. Apple has already pushed Reader off the Mac with the bundled Preview, thank GOD, because Reader is a insecure POS.
  • Reply 19 of 50
    How about returning some of it to us shareholders?
  • Reply 20 of 50
    I'd like to see Apple buy Wacom, Drobo, Withings, Jawbone and RED.
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