Earlier this week the San Francisco Chronicle reported that an anonymous source told the paper Apple (NASDAQ:AAPL) acquisitions head Adrian Perica was in talks with luxury electric car maker Tesla (NASDAQ:TSLA) last year, leading to a flurry of speculation about what an Apple-owned Tesla would look like. In the wake of that story, Tesla stock hit a record high during trading on Tuesday. The stock hit a high of $205.84 during trading and closed at $203.70. Tesla is due to report fourth-quarter results on Wednesday.
Tesla CEO Elon Musk reportedly met with Apple’s acquisitions genius Adrian Perica last spring. Perica has been in charge of straightening out Apple’s messy acquisitions technique since 2009 and has helped the company make a plethora of successful purchases. According to the Chronicle, Apple’s decision to hire Perica from Goldman Sachs (NYSE:GS) shows that the company is ready to focus more on acquisitions. Apple spent $525 million on buying businesses last quarter, according to its most recent filing, which is double what it spent in all of the previous year.
An acquisition of Tesla would make sense for Apple on several levels, even though the company has little to no experience in automobiles. Apple has been working to get car makers to adopt its iOS operating system for use in car infotainment systems. The company has focused on luxury auto makers including Ferrari and its racing arch rival Google (NASDAQ:GOOG) to get its technology into cars. Vehicles may well represent the next great frontier for mobile technology as the smartphone market reaches its saturation point.
Apple also targets a similar kind of customer as Tesla does with its high-end, high-tech, environmentally-friendly products. Those interested in buying one of Tesla’s electric vehicles are likely already Apple users, so it would make sense that having an iPad built into the car would appeal to them. At least one analyst has already called for Apple to purchase Tesla. Adnaan Ahmad, an analyst at the investment bank Berenberg, went as far as to write an open letter in October to Apple CEO Tim Cook, calling on him to buy Tesla at a time when Apple was coming under intense pressure to put its billions of cash to better use.
In an interview with Bloomberg in May of last year, Musk said that he doesn’t plan to leave the company for several years and that he likely would not accept an acquisition by another car maker. He did go on to say that being acquired is “one of the possible outcomes,” and named Apple as a company that has the cash necessary for such a deal.
Apple CEO Tim Cook is under increasing pressure to innovate, as Apple hasn’t introduced a new product line since the first iPad was released by former CEO Steve Jobs in 2010. A deal with Tesla would be a big risk that will pay off handsomely for Cook — if he can figure out how to run a car company.
More From Wall St. Cheat Sheet:
- Peas in a Pod: Are Apple and Tesla Mulling a Deal?
- Secret Tesla Meetings: Is This How Apple Will Innovate?
- More Bad News for Smartphone Makers
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