Odds aren’t: Apple doesn’t need a monster acquisition

Macalope

You’ve got to spend money to make money the old adage says and if that’s the case then it might as well be someone else’s money you spend, right?

That at least seems to be the philosophy of Wall Street analysts covering Apple, who are now salivating at the idea that the company will benefit from a tax holiday and be able to repatriate $220 billion.

“Citi sets odds on Apple's M&A target.”

Citi is a very big company that pays people a lot of money to analyze stocks for investors to help them make smart decisions.

Or, that’s what this Citi marketing material says, anyway.

In reality, apparently, they pay people to write Apple acquisition porn. The Macalope doesn’t know why they do that — since what Citi analyst Jim Suva thinks Apple will do has about as much chance of happening as randy, good-looking pizza delivery people showing up on your doorstep does — but they do.

Suva’s odds seem… pretty unlikely.

The Citi handicapping puts 40% odds on a Netflix buyout…

[spit take]

Great. There goes another monitor.

The Macalope finally had to switch to having his MacBook drive a monitor because he was going through too many MacBooks by spitting coffee, water, gin or flames of indignation at what his job forces him to read onto them. Ideally Apple’s upcoming monitors will at least be splash resistant like the Apple Watch Series 1 if not water-resistant up to a depth of 50 meters like the Series 2.

Really, though, it’s 2017. If your monitor isn’t water-resistant up to a depth of 50 meters then shut the company down and give the money back to the shareholders. The Macalope doesn’t know this for a fact but he presumes someone announced such a monitor at CES this year.

Giving money back to the shareholders, though, brings up what Apple actually might do with its cash windfall. As Neil Cybart notes, Apple is not likely to acquire Netflix, Disney, Tesla or the world’s biggest party sub, all but one of which Suva included odds for (frankly, the Macalope thinks the party sub has a better chance).

If Apple brings back foreign cash due to U.S. tax reform, share buyback will be the most likely use of that cash.

Which is a kind of ironic twist to Michael Dell’s famous quote about the company. Apple is giving money back to the shareholders — just because it was incredibly successful, not because it’s shutting down. Looked at another way, Apple is saying the more valuable use of its money is buying itself, not some other company. The fact that Wall Street analysts don’t see that is pretty much par for the course.

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