The tax windfall happens as the rumors about Apple starting its own streaming service ramp up. If the transaction is successful, this would make the iPhone maker the undisputed dominant force in the streaming business; a huge jump from its current position. And for good reasons! Let us know below. Regardless of these mixed emotions, there is a high likelihood that Apple will buy Netflix in 2018 according to Citi analysts. Since the cut in corporate taxes will now allow companies to repatriate cash stored overseas without a major tax hit, Apple will be prompted more than ever to make a large purchase for a company like Netflix. While all of that sounds good, it's still less than a 50 percent estimate!
"The firm has too much cash - almost $250 billion - growing at $50 billion a year".
On the other hand, Apple may benefit highly from buying Netflix as a result of President Trump's tax policy created to bring overseas corporate money back to the US. As such, tax reform may allow Apple to put this cash to use.
"With over 90 percent of its cash sitting overseas, a one-time 10 percent repatriation tax would give Apple $220 billion (roughly Rs. 14 lakh crores) for mergers and acquisitions (M&A) or buybacks", says the two analysts. Apple would need only a third of that cash to buy Netflix, the analysts say.
How excited are you to have come across the possible future acquisition?
Apple in November ordered two seasons of a scripted video series starring Jennifer Aniston and Reese Witherspoon that doesn't have a launch date. For perspective, Disney's buy-up with Fox was worth $52.4 billion. Its iTunes, though a massive hit initially but soon the likes of Netflix, Hulu, and Amazon have gained more viewers. The new strategy favors subscription-based media businesses over ad-focused firms due to the growing trend of ad avoidance among consumers. The boost in original content will result in a $2 billion saving in licensing fees, the analyst said.
The business of digital entertainment is surely getting exciting.
Netflix stock also may have been supported by another report from Citi analysts.