Apple Might Buy Netflix Following Trump Admin Tax Cuts, Citi Analysts Say

Gwen Vasquez
January 3, 2018

Apple was previously unable to bring its foreign earnings back to the USA due to federal tax law, but President Trump's newly passed corporate tax cut offers companies a one-time allowance for companies to repatriate cash stored overseas without a major tax hit, Business Insider reports.

"The firm has too much cash - almost $250 billion (roughly Rs. 15.9 lakh crores) - growing at $50 billion (roughly Rs. 3.18 lakh crores) a year. This is a good problem to have", Suva and Merchant were quoted as saying.

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. Suva and Merchant estimate the deal would cost the company about a third of the cash freed up by Trump's tax plan, leaving Apple with plenty of assets to develop further content for the platform should they acquire it.

"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.

According to analysts at Citi, there is a 40% chance Apple would buy Netflix. However, the question here is, despite the huge cash reserves, does it make sense for Apple to buy Netflix? It'll have money to burn, and spending it to disturb the streaming market seems like a very Apple thing to do. Now that we know that such a deal can happen, the question is, will it?

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Apple is well known for keeping the majority of its corporate profits outside of USA shores.

Who do you think Apple should attempt to buy?

Apple also recently dipped a toe into content creation, with a Jennifer Aniston and Reese Witherspoon-starrer video series. So how much is Netflix worth? Its iTunes, though a massive hit initially but soon the likes of Netflix, Hulu, and Amazon have gained more viewers.

Apple already produces some original content including shows like "Carpool Karaoke" and 'Planet of the Apps, ' which debuted on Apple Music in 2017. That's a 60 percent increase from the 50 films on its slate in 2017.

Wall Street Journal points out that HBO spent about $2 billion on content last year, while Amazon spent around $1 billion in 2013 alone, the year it started original programming.

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