Is Appleflix Coming? Analysts State Apple May Attempt Netflix Purchase

Janie Parker
January 3, 2018

As cited in Gadgets 360 and elsewhere, Citi analysts Jim Suva and Asiya Merchant believe Apple could be eyeing a Netflix purchase due to the new tax changes passed by Congress and signed into law by President Trump.

"The firm has too much cash - almost $250 billion (roughly Rs. 15.9 lakh crores) - growing at $50 billion (roughly Rs. 3.18 lakh crores) a year". Apple's possible mergers and acquisitions were given a ranking by two of Citi's analysts in a presentation it shared with its clients, which highlighted Netflix as a possible purchase. Like many multinational corporations, Apple avoided repatriating profits from outside the U.S.to avoid being taxed a second time. Besides the likes of Tesla, Disney, and Electronic Arts, the M&A targets of Apple include Netflix sitting on 40% probability, the highest in the graph.

The analysts say that Apple is only going to need a third of that cash to fund its purchase of Netflix.

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If Apple were to buy Netflix it could spark a tech giant arms race, with the likes of Amazon and Google both looking for ways to shore up Amazon Prime Video and YouTube repetitively to fend off any extra competition Netflix can levy with Apple's help and the iOS ecosystem.

A one-time 10% repatriation tax would translate to Apple having $220 billion to spend as it sees fit. The closest the two companies have been mentioned in proximity to each other is Apple's steady moves to launch its own streaming service to rival Netflix and invest in original programming. (AAPL) will buy online video streaming service Netflix Inc. Now that we know that such a deal can happen, the question is, will it?

Apple tried to get serious about streaming back in August of 2017, setting aside a reported $1 billion to develop new original content and buy up existing programs. While Apple does offer a vast catalogue of video and music content on iTunes, there is no denying the fact that streaming services such as Netflix are much more popular. The company is also working on its first scripted series with Jennifer Aniston and Reese Witherspoon. The major downside for Apple stockholders is that depending on how such a deal is structured, it would most likely lead to a decline in Apple's high-flying stock in the short term.

Other reports by TheDailyFarc

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