Apple could be preparing to buy Netflix, say Citi analysts

  • Posted 4 months Ago

According to analysts at Citi, there's a 40% chance that Apple will acquire Netflix. If Apple were to do that, it would certainly be one of the largest deals we'll see in 2018 as the streaming service currently has a market cap of $87 billion. As Citi points out however, that figure is just a third of the huge $252 billion cash stockpile Apple currently holds overseas and is yet to bring back to the US.

Until now, Apple has been reluctant to bring back the money due to the high taxes it would incur. In fact, the company has even taken out loans instead of bringing the money back as it works out cheaper. Under President Trump's newly passed tax cuts, however, companies are given a one-time allowance to repatriate overseas cash without a major tax hit.

"The firm has too much cash – nearly $250 billion – growing at $50 billion a year," said Citi analysts Jim Suva and Asiya Merchant. "This is a good problem to have. […] With over 90% of its cash sitting overseas, a one-time 10% repatriation tax would give Apple $220 billion for M&A or buybacks."

Others have argued that the acquisition is highly unlikely, however, stating that Apple has already pledged $1 billion to creating original content of its own. Buying Netflix could also make Apple seem weak or desperate, suggesting it no longer believes in its own products.

Neither Apple nor Netflix has responded or mentioned any such deal, so at this stage it's all just pure speculation.

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Tags: apple, netflix