Apple (Nasdaq: AAPL) has an Ebenezer Scrooge complex.
Coming off yet another blowout quarter, one of the more frustrating yet exciting gems can be found on the iEverything giant's balance sheet. Apple closed out its fiscal first quarter with $27 billion in cash and short-term investments and another $32.7 billion in long-term marketable securities.
How can $59.7 billion be frustrating?
Well, Apple has no intention of letting its shareholders anywhere near that expanding pinata in the form of quarterly dividends. There also doesn't appear to be a pressing need to break into an aggressive share repurchase, especially if its inner ego won't be placated until it passes ExxonMobil to become the country's most valuable company by market cap.
Given its healthy prospects and the short upgrade cycles for its iOS gadgetry, there's little reason to believe that it won't continue to rain greenbacks in Cupertino.
This brings us to acquisitions. Apple has the financial flexibility to go on the mother of all shopping sprees. It also may want to pursue some meaty buyouts to help investors set aside concerns about Steve Jobs' renewed medical leave of absence.
Apple isn't afraid to go shopping. It just prefers to do so in small grabs at the convenience store. Whether it's music streaming website lala.com or mobile advertising specialist Quattro, Apple prefers to order bite-sized tapas.
Isn't it time for buyouts that will actually move the needle?
Let's go over three of the public companies that I think would make sense for Apple.
- Netflix (Nasdaq: NFLX) -- No company has come close to taking on Netflix in digital streaming, which now accounts for more than half of the celluloid consumed by its 16.9 million subscribers. Apple's piecemeal rentals of new releases dovetail nicely with Netflix's more popular smorgasbord approach.
- TiVo (Nasdaq: TIVO) -- The third time may be the charm for Apple TV, but the better play would be to own a patent-rich pioneer in home theater gadgetry. It's not just a matter of the easy renaming of Apple TV to Apple TiVo, nor the catch-all logic of an Apple TV DVR. TiVo is a company that has never been able to financially live up to the potential of its cool products, while making cool products pay off is Apple's strong suit.
- Yahoo! (Nasdaq: YHOO) -- Apple isn't usually considered a conventional dot-com, though Yahoo!'s forte in display advertising and its gargantuan consumer reach can come in handy for Apple as it fleshes out its own mobile advertising platform.
I realize these deals are unlikely to happen, but Apple needs to begin putting its market-leading cash reserves to work. One visit from the ghost of Christmas Future should be enough to loosen Scrooge's purse strings.
Who do you think Apple should acquire? Share your thoughts in the comment box below.
