Analysts say there's a 40% chance Apple will buy Netflix

Citi Apple acquisition targets

Contrary to the reports of Apple launching a video subscription product in 2018 to counter Netflix, analysts from Citi have said that the iPhone maker could possibly buy the entertainment company by taking advantage of US President Donald Trump's corporate tax cut.

"The firm has too much cash - almost $250 billion (roughly Rs. 15.9 lakh crores) - growing at $50 billion (roughly Rs. 3.18 lakh crores) a year".

The other reason the analysts at Citi think Apple could target Netflix? Suva and Merchant estimate the deal would cost the company about a third of the cash freed up by Trump's tax plan, leaving Apple with plenty of assets to develop further content for the platform should they acquire it. "With over 90 percent of its cash sitting overseas, a one-time 10 percent repatriation tax would give Apple $220 billion for M&A or buybacks". There's a 40 percent chance it could happen according to Citi analysts Jim Suva and Asiya Merchant.

While most of software and hardware giant Apple's greatest innovations represent long-developed internal endeavours, the company is no stranger to acquiring outside talent whole-cloth. The tax cut, as well as a one-time allowance for companies to repatriate cash held overseas without a major tax fee, could open up Apple's path to buy new companies.

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If the idea of seeing an Apple logo when you fire up Netflix makes you pause and say "whoa", it should.

The analysts also said that there is only a 10 percent chance of Apple buying game producers like Electronic Arts Inc., Take-Two Interactive Software Inc. and Activision Blizzard. Netflix invests heavily on original series and has crafted some of the most popular and talked-about television series we know of.

He argued that the streaming firm is "actually being more judicious" about how much it spends on original content, contrary to the many headlines reporting that it's willing to spend $20 million per original TV episode. Apple has struggled to offer compelling video content, even as iTunes revolutionized the music industry. The company is also working on its first scripted series with Jennifer Aniston and Reese Witherspoon. Unfortunately for Apple, most users still prefer traditional streaming content apps like Hulu and Netflix.

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