Every now and then, we hear rumors about Apple planning to make a significant acquisition like Disney, Netflix, Tesla, or even Peloton. While some of these companies would like to be part of the most valuable firm in the world, the last big acquisition made by Apple was Beats almost a decade ago for $3 billion. But what do Apple investors think about this conservative approach, and why doesn’t the company use some of its $165 billion cash hoards? Here are some possibilities.
First of all, Apple doesn’t make big purchases that would elicit antitrust allegations. Imagine if the company bought Spotify, Sonos, or Peloton. It would probably put the Cupertino firm under scrutiny by regulators, as has happened to Amazon and Microsoft.
Microsoft, for example, is trying to close its Activision Blizzard deal, which is valued at $69 billion. Regulators and governments think this could be a huge issue for competition in the video game field.
While these companies believe huge deals are a better approach, Apple bets on small startup acquisitions to increase its home-grown push into new markets. The Cupertino firm also prefers to return much of its excess cash to shareholders via share buybacks and dividends, as Bloomberg reports.
“Not doing a big deal hasn’t impacted them, and if it ain’t broke, don’t fix it,” said Gregg Abella, chief executive officer of Investment Partners Asset Management, which holds the stock to Bloomberg. “I’m pleased that Apple has a lot of discipline in this regard.”
Logan Purk, an Edward Jones analyst, follows the same view: “If Apple tried to do some massive deal that was outside of its wheelhouse — not complementary, really changing its story — that would make me worried. It would be so outside its normal course of action that you would have to ask why.”
Is Apple done making big acquisitions?
As Apple is already under scrutiny regarding its App Store, it’s unlikely the company would risk a big merger that could create more issues with regulators.
That said, if the opportunity presents itself, we couldn’t say Apple wouldn’t take it. But the last few years show the company would rather make small acquisitions than mess with big players.