January 2, 2018

Apple May Acquire Netflix, According To Citi Analysts

Recently, there were reports that Apple will be launching its own video subscription service in 2018 to counter entertainment company, Netflix. But contrary to those reports, Citi analysts Jim Suva and Asyia Merchant have just claimed that the tech giant could possibly buy Netflix by taking advantage of US President Donald Trump’s recent corporate tax cut.


Apple has almost around $250 billion in cash but most of it is sitting overseas. The company has avoided repatriating cash to the US to avoid high taxation rates. However, the new taxing rules from President Donald Trump may allow Apple to put its massive pile of cash to use.

“The firm has too much cash – nearly $250 billion (roughly Rs. 15.9 lakh crores) – growing at $50 billion (roughly Rs. 3.18 lakh crores) a year. This is a good problem to have,” Suva and Merchant were quoted as saying.

Under the new taxing rules, the tech giant could bring about its cash stored overseas to the US by just paying a one-time 10 percent repatriation tax, without a major tax liability. The repatriated cash can then be used for stock buybacks and acquisitions.

“With over 90 percent of its cash sitting overseas, a one-time 10 percent repatriation tax would give Apple $220 billion (roughly Rs. 14 lakh crores) for mergers and acquisitions (M&A) or buybacks,” they added.

The Citi analysts say that Apple is only going to need a third of that cash to fund its purchase of Netflix. However, according to analysts, there is only 40 percent likelihood that Apple might end up buying Netflix.

Apple has for years trying to establish its footing in the online video streaming space, struggling to offer a compelling TV or movie offering. iTunes has been a huge hit for the company, but viewers have migrated increasingly to services like Netflix, Amazon or Hulu to watch their favorite shows. Acquiring Netflix will instantly give the iPhone maker a dominant position in the market.

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