Apple Could Buy Netflix, According To Citi Analysts

Apple CEO Tim Cook and Netflix CEO Reed Hastings.   Getty  BI illustration

Apple whose current stock price is $169.23 has surged 50% this year. Meanwhile, Apple was up by 1.28 percent on Tuesday.

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 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.

As some of you may be aware, Apple is now sitting on a huge pile of cash, $252 billion to be exact.

"The firm has too much cash - almost $US250 billion - growing at $US50 billion a year. This is a good problem to have", said the analysts. Under the new taxing rules, the tech giant will be able to repatriate about $220 billion in cash to the US. Apple wants to get benefited from this by using its $252 billion cash stored in foreign jurisdiction. Apple, which is sitting on a massive cash pile of $252 billion that is mostly outside the US, would need to spend only a third of that cash to buy Netflix.

Apple would need only a third of that cash to buy Netflix, the pair say.

Though Apple has been developing some original content for Apple Music, it's lagging far behind other streaming services. That money helped Apple lock down an order for a reboot of the Steven Spielberg executive-produced Amazing Stories, as well as a coveted scripted drama about morning TV shows set to star Jennifer Aniston and Reese Witherspoon. Suva and Merchant also offer up Disney (25 percent possibility), Tesla (5 percent) and gaming companies Activision, Electronic Arts and Take-Two Interactive (all 10 percent) as potential spending targets for Apple's corporate tax break.

Apple's struggle to establish itself as a key player in internet broadcasting, despite launching Apple TV and working on numerous TV shows, is well documented.

In his upgrade report on Netflix stock, Nollen also described Netflix as being "miles ahead of peers", noting that Walt Disney's "eventual" streaming service is still a couple years away.

Nollen predicted that Netflix will increase original content from 25 percent in 2017 to 60 percent in 2020.

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