Citi Analysts Say Apple May Acquire Netflix

03 January, 2018, 01:10 | Author: Devin Moran
  • Does it make sense for Apple to buy Netflix?

"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".

With this new information at hand, Citi analysts have come to the conclusion that Apple is likely to buy Netflix, which would only take out one-third of its available cash on hand. As Citi points out however, that figure is just a third of the huge $252 billion cash stockpile Apple now holds overseas and is yet to bring back to the US.

Not only that, but the opportunity to repatriate money held in offshore accounts without paying a bunch of extra taxes means that Apple can bring the cash necessary for the purchase back into the States. "With over 90 percent of its cash sitting overseas, a one-time 10 percent repatriation tax would give Apple $220 billion for mergers and acquisitions (M&A) or buybacks".


Both analysts say there is a 40% chance of it happening as the new tax rules will see Apple bring back into the USA about $220 billion. The note mentioned a 20% to 30% likelihood of a partnership between Apple and Disney, and a 40% potential of a deal between Apple and Netflix. Acquiring Netflix will instantly give it a dominant position in the market. Let us know below. However, while Apple has tried to lure streaming customers with original content, viewers still flock to other services, like Netflix, Hulu and Amazon Prime Video. Users can download on-demand movies and shows from the company's iTunes portal.

Apple has recently dipped a toe into content creation: Jennifer Aniston and Reese Witherspoon will be in Apple's first scripted video series. By purchasing Netflix, Apple could jump start its streaming efforts in a really major way. Forbes reporter Karl Kaufman argues that there is good reason to doubt this analyst prediction, writing, "Apple has already committed $1 billion towards creating new shows and their largest acquisition was buying Beats for $3 billion in 2014".

Nollen predicted that Netflix will increase original content from 25 percent in 2017 to 60 percent in 2020. Heads turned when Netflix announced that it would devote $7 billion to $8 billion to content in 2018, but it might still be shocking to hear that Netflix is going to release 80 original movies in 2018.

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