I couldn’t make this up if I tried. Last week, Steve Jobs hinted that his company, with $51bn USD in the kitty, was looking to strategically expand into more opportunities to broaden their appeal. Usually when a CEO says this, it’s code for “we’re going on a shopping spree”, and all that people could do was pontificate after the fact and guess who would be the target.
Boy, have they ever.
Industry Gamers is reporting some of the companies that have been rumoured by investment firms include Sony, Electronic Arts, Adobe and Disney, among others.
OK. Now that I’ve done my duty and reported this nonsense, let’s rip it to shreads.
The fact that these are reported as potential targets by places such as Baron’s and Kauffman Brothers is highly irresponsible. Apple’s done well by being everything to everyone; they haven’t had to stretch out too far beyond what they are. In fact, their whole business model has revolved around two key things: 1) We’re Apple, and 2) You work our way or you don’t work. It’s worked because their supporters are legion, and they’ve been able to make enough devices to appeal to mainstream America, while still asserting their control over their devices and business models. Their insulation is a key to their business.
Therefore, going out and just buying a company the size of Disney or Sony would be counterproductive if they were to keep those names going. Disney is an iconic name in America, and Sony is almost as iconic in Japan. To be able to merge with those companies would lead Apple into having to go far outside its comfort zone. Furthermore, that assumes that these companies are able to be bought, merged, etc. Using 2009’s numbers as an example, Apple’s total assets amounted to $47.5bn (source), whereas Sony’s amounted to $31.7bn (PDF), and Disney’s equated to $63.1bn. Sony’s numbers aren’t that much lower than Apple’s, and Disney’s dwarf them, without really giving any overlap in terms of markets. Disney seems to have been mentioned simply because Steve Jobs is a shareholder.
The only one that I can see that makes a bit of sense in the gaming industry is Electronic Arts, but I find even that to be unassailable. EA isn’t in a position to sell anything; if anything, they’re buyers, if the Playfish acquisition is an indication. Everyone’s been making a big deal of EA’s stock for awhile, almost climbing over each other to say it’s going to go down, but they’re in a stronger position than any third party developer outside of Activision.
If anything, I think any acquisition Apple makes will mimic EA’s buying of Playfish; buy a smaller company with a more narrow focus, and incorporate them into Apple’s business. That’s just speculation, but it makes more sense than a supposedly “respectable” group saying “APPLE’S GONNA BUY DISNEY LOLOL” as if they were fourteen year olds on a message board.
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