Shares in Sony surged last night in Japan, on speculation that Apple may use some of their $55 Billion cash reserve to buy into the struggling consumer electronics company.At the close of trading Sony’s share value had climbed 3% after US financial magazine Barron hinted at a Sony investment by Apple.
During the past two years, Sony have seen their fortunes decline due to falling revenues and a move by consumers to new brands such as Apple, Samsung and HTC. In Australia Apple revenues have fallen by $200M with profits falling from $49M in the 2008/2009 financial year to losses of over $6M in 2010.
Apple chief Steve Jobs had defended the company’s refusals to offer share dividends to investors as a deliberate decision to “keep their powder dry” for a major acquisition.
Analysts said that an Apple acquisition of Sony “could make sense” while giving the US company a direct line into the living rooms of millions of people around the world as well as access to a content and TV company.
They also claim that a move on Sony could trigger concerns from Japanese regulators about a foreign acquisition of one of its most important economic contributors.
Engadget said that in the past Apple have historically, only ever acquired relatively small companies that either had a product, technological breakthrough or else had talent that Apple wanted.
Currently Apple is sitting on a multibillion cash pile, one of the largest in the world of any technology company due to the success of the iPhone, iPod and iPad devices.
During the past week and following their recent $3.9 Billion dollar profit in the last quarter speculation has mounted that Apple may take an investment in Facebook or even Disney, a company in which Apple CEO Steve Jobs already has a significant investment.
To date Apple has never paid more than $500m for an acquisition, which risks straying into unfamiliar arenas. Former executives and bankers said they would be shocked if the maker of the iPhone, iPad tablet and Mac computer did anything as far-reaching as buying Sony.
“I don’t think they will buy anything big any time soon. It is just not in their genes,” said a former Apple strategist.
The Financial Times said that a key emphasis for Apple now is the company’s push into internet-connected television, with its Apple TV streaming media player, relaunched in September. It is a complex, technology-intensive battleground, where Apple already faces established cable operators and well-heeled Silicon Valley competitors, such as Google.
Last month Apple licensed know-how in the sector from Rovi, a company that propelled the technology provider to a record $5bn market capitalisation. Apple could easily buy the company, or one of its competitors, outright. In Australia Rovi technology is used by Foxtel and several TV companies as well as electronic program guide operators due to their patent control of the way that content is delivered to an EPG.
There is also speculation that Adobe Systems could be a software target for Apple, in part, for defensive reasons says the Financial Times. In the smartphone sector, Apple is in a major fight for superiority with devices running on Google’s dominant Android operating system. A key advantage of the latter is they have the ability to display videos based on Adobe’s Flash technology.
Mr Jobs has complained that Flash is “buggy” and consumes too much battery life, but he may still want to take charge of the company, improve the software, and optimise it for Apple devices.
Adobe also has an enviable presence on Microsoft desktops with its free Reader document display program. Steve Ballmer, Microsoft chief executive, recently discussed with Adobe possibilities for the companies to work more closely and even mentioned a possible offer, which no doubt prompted Apple to consider contingency plans.
But there is a chance Apple will do nothing. Mr Jobs has often hinted at future purchases without a major move. Given Apple’s near-death in the 1990s, Mr Jobs “likes having a huge cash cushion”, a former executive said.