Could These 4 Major Acquisitions Get Apple Back on Track?
If Stockr CEO Vinny Jindal gets his way, Apple (NASDAQ:AAPL) will break with tradition and acquire some big companies to help fill the “missing pieces” in its product portfolio with some of that giant cash stockpile it’s been hoarding.
Jindal, of online investor community Stockr, says Apple’s reluctance to make any major acquisitions — the company instead opts to create businesses internally or make small, tuck-in acquisitions of companies with innovative technologies but only a handful of employees and products — makes no sense in light of its giant cash stockpile and waning enthusiasm for the stock, according to an Investor’s Business Daily report.
It was one thing for Apple to stick with what worked — it became one of the most valuable companies in the world using this strategy — but Apple’s stock is deteriorating quickly, down 40 percent since September on concerns about slowing growth, and Jindal says the company needs a big acquisition for a shot of adrenaline to get things back on track. The company is in the position to acquire just about any company that takes its fancy, and yet has stubbornly held to an old model that isn’t working as well as it once was.
With $40 billion in cash and short-term marketable securities, Apple has the means to make some interesting acquisitions, said Jindal, especially in cloud computing and mobile payments, two major growth areas around the world. Apple also has $97 billion in long-term marketable securities that it could leverage.
Jindal asked members of the Stockr community to come up with some ideas for potential Apple acquisitions, and here’s what they came up with:
Dropbox is a pretty obvious choice, given its broad popularity and the fact that Apple has fumbled in the cloud computing department. Dropbox would be the perfect complement to iCloud, or could even replace the underwhelming service, which doesn’t even support non-iOS devices.
“In the few instances where Apple has been willing to build services for other platforms (e.g., iTunes), they enjoyed a fantastic windfall for their hardware sales,” Jindal wrote in a report. He also notes that Dropbox’s recent Mailbox acquisition could serve as a mobile replacement for Apple’s own email client. Further still, “Dropbox is quickly positioning itself as one of the few threats to Google’s (GOOG) cloud productivity suite, and Apple desperately needs to become competitive here.”
Apple is also trying to build a mobile payments presence with Passbook, but so far the application is seriously lacking in that it just doesn’t have enough partners to be truly relevant to the average consumer, and acts more as a gift card than a credit card. Square, meanwhile, already has a solid base of retailers that accept its mobile payments, which Jindal says when combined with the 300 million credit cards Apple already has on file with its iTunes store, could instantly make Apple a mobile payments leader. Not to mention, Apple would bring founder Jack Dorsey on board, the man behind Square and Twitter.
Sadly, Jindal contends, “the probability of this acquisition remains low, as Apple is likely building an internal solution to mobile payments, and the private market valuation of Square is inflated.”
Lytro is a start-up manufacturer of light-field cameras, groundbreaking in that they let users change the focus of a picture after it’s been taken.
“This is some of the most innovative camera technology the world has seen in a long time, with incredibly strong intellectual property,” Jindal wrote. “Buying Lytro and integrating their technology into the iPhone would create a serious competitive advantage for a key component of smartphone devices.”
However, Jindal notes that, “a potential roadblock to this acquisition is the difficulty of integrating this technology into such a small device.”
Finally we come to Nuance Communications (NASDAQ:NUAN), a company with a deep patent portfolio for speech-recognition. Siri anyone? Apple is believed to already license some of Nuance’s technology for its own personal voice assistant, and Jindal says that, as Apple moves into “wearable technology,” it will be relying more and more on “natural language processing and speech recognition.” And as iPhone users know, Siri still struggles sometimes with comprehension — she could use a pal to help with the nuances of various accents and languages.