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Is Apple Inc. About To Go On a Buying Spree?

By Erin Kennedy and Evan Niu, CFA – Feb 9, 2014 at 3:00PM

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Apple has always played it small when it comes to acquisitions. Is Apple preparing to open up its wallet when the time is right?

Historically, Apple (AAPL -0.80%) has played it conservative when it comes to acquisitions. The company generally never spends more than $500 million on any purchase. That might all be changing though, as Tim Cook has hinted that "huge" acquisitions are not off the table if it's the right fit for the long term. The price of innovation is going up, and it makes little sense to stick with an arbitrary monetary limit -- especially when you consider how much cash Apple has sitting around.

Google (GOOGL -0.96%) has been scooping up companies left and right, giving it optionality into future technological breakthroughs. Even Microsoft (MSFT -1.89%) has always been far more acquisitive than Apple. As a result, both Google and Microsoft have much more sitting on the balance sheet in the form of goodwill and intangibles. That theoretically increases their impairment risk. At this point, Apple can afford to take more acquisition risks.

In this segment of Tech Teardown, Erin Kennedy discusses Apple's new approach to acquisitions with Evan Niu, CFA, our tech and telecom bureau chief.

Erin Kennedy owns shares of Apple. Evan Niu, CFA owns shares of Apple. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple, Google, and Microsoft. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Stocks Mentioned

Apple Stock Quote
Apple
AAPL
$146.63 (-0.80%) $-1.18
Microsoft Stock Quote
Microsoft
MSFT
$250.20 (-1.89%) $-4.82
Alphabet Stock Quote
Alphabet
GOOGL
$99.48 (-0.96%) $0.96

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