by Tom Taulli | February 13, 2012 9:50 am
When Steve Jobs came back to Apple (NASDAQ:AAPL) in 1997 as the acting CEO, the company was on the brink of bankruptcy, the stock was trading around $4, and Jobs had to seek out a $150 million investment from rival Microsoft (NASDAQ:MSFT).
Oh, how far Apple has come.
AAPL stock on Monday morning brought its months-long march to the once-unthinkable $500 mark — a testament to Jobs and the radical change he enacted 15 years ago, when he put an almost maniacal focus on just a few critical products.
The company now has almost $100 billion in the bank, and Apple continues to grow as if it were a startup. In its most recent quarter, revenues surged by 73% and earnings were up a staggering 118%. InvestorPlace Editor Jeff Reeves recently said it best: “People just can’t wait to give the company their money.”
And Apple has done all this by swallowing the digital music player business, dominating the smartphone market and holding a virtual monopoly in the tablet space.
At this point, what else is even left for Apple? Well, here’s a few possibilities …
At almost $100 billion, Apple has enough cash on hand to do a deal. And it would be a winner. Despite its software prowess, Apple has had little success with Internet and social properties. Just look at Ping, a feeble attempt at creating a social network for music.
But with Facebook, Apple instantly would turn into the global leader, with about 845 million monthly active users. The deal also would add something else to Apple’s arsenal: digital gaming. As seen with Zynga (NASDAQ:ZNGA), this has been a red-hot sector. Heck, maybe Apple should buy Zynga, too.
No doubt, Mark Zuckerberg would be resistant to a deal. Of course, if Apple really wanted to butter him up, they could put Zuckerberg at the helm. He’s certainly got innovation genius — and he knows how to destroy his competitors, such as Friendster and MySpace, and can fend off net giants like Google (NASDAQ:GOOG).
Techcrunch’s Erick Schonfeld has a great piece on this topic. His point: To make Apple TV a success, it must have control over content. After all, when it comes to TV, that’s what people want — and not necessarily a cool device.
Apple has lots of experience dealing with the entertainment business. Its deals with the record industry were brilliant and led to the huge success of the iPod.
But with a huge cash hoard, Apple can be even more transformative. Apple has the money to make a number of acquisitions in the visual entertainment sector — and a couple wouldn’t make much of a dent in the coffers. Here’s a look at a few companies Apple could try to buy:
Or, rather than just buy the companies outright, Apple instead could just pay huge sums to get exclusives on premium content. The result would be bad news for companies like Netflix (NASDAQ:NFLX) and Amazon.com (NASDAQ:AMZN).
Of course, Apple could just try throwing some of that money back at investors. Most mega-tech companies issue dividends — IBM (NYSE:IBM), Microsoft (NASDAQ:MSFT) and Intel (NASDAQ:INTC) have payouts ranging from 1% to 3%, which Apple certainly could shoulder. AAPL is well overdue to join the dividend club, and shareholders deserve it.
Or maybe Apple could try hiring a few more Americans. The New York Times recently published an in-depth piece about Apple’s massive overseas employment, which included a mention of how last year, Steve Jobs told President Barack Obama all those jobs weren’t coming back home. Considering Apple clearly isn’t hurting for profits, perhaps a more charitable tack on domestic employment is in order. Or Apple could at least invest some of its cash hoard into education and training — for instance, in engineering.
Heck, at the very least, Apple could toss every shareholder a free iPad.
Tom Taulli runs the InvestorPlace blog IPO Playbook, a site dedicated to the hottest news and rumors about initial public offerings. He also is the author of “All About Short Selling” and “All About Commodities.” Follow him on Twitter at @ttaulli. As of this writing, he did not own a position in any of the aforementioned securities.
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