Even though iPhone maker Apple has not shown any appetite for gobbling up large companies, analysts on Wall Street continue speculating that the Cupertino, California tech giant will use the massive stockpile of cash it possesses to make a deal that would be game-changing in the industry.
Citigroup the investment bank is the most recent to give an opinion as to what Apple could do with its cash and marketable securities holdings, which were over $256.7 billion on April 1. Out of that total, 93% is offshore.
An analyst with Citi said Netflix, the streaming video network is likely the best target if Apple were to decide to make a larger than normal acquisition.
He believes there is a 40% chance Apple would buy Netflix. However, any large deal would be contingent on corporate tax reform in the U.S., specifically the rate for foreign profits to be repatriated.
Citi believes a repatriation tax of 10% on foreign cash would be enough to entice the tech giant to make a large mergers and acquisitions deal.
One other possibility could be Walt Disney the entertainment conglomerate. The analyst placed odds of 25% for Apple to buy Disney.
Other businesses that Apple may hold an interest in acquiring include Tesla the maker of luxury electric vehicles, Hulu another video streaming service and Activision Blizzard the video game maker.
The Citi analyst said acquiring Netflix would make more sense than any other company.
Netflix is worldwide, has no assets that are noncore and has disrupted the worldwide video ecosystem, said the analyst.
Apple could actually help to accelerate that disruption. Since Apple generates large sums of cash, it could help accelerate Netflix and deepen the services push into more original content.
Netflix at this time has a $67.5 billion market capitalization. The largest acquisition by Apple to date was for $3 billion to acquire Beats Electronics the maker of headphones and its streaming music service back in 2014.
CEO of Apple Tim Cook during an interview this week said the company wants to be an online video player.
To date, the focus of Apple in streaming video has been selling services of third parties such as Netflix, BHBO and Hulu through the company’s App Store and receiving a fee for payment management.
Recoded on Friday reported that Apple was closing in on a deal to offer Amazon Prime Video services on its own Apple TV box possibly starting during the 2017 third quarter.