5 Tech Companies That Apple Could Buy Just With Its Cash
January 26, 2013 6:03 AM EST
To those that have been following the rise (and potential fall) of Apple (NASDAQ: AAPL [FREE Stock Trend Analysis]), one common theme has been the vast cash and investment pile on the company's balance sheet.
As of the end of the most recent quarter, Apple's fiscal first quarter, cash and cash equivalents including investments increased to $137 billion, or about 30 percent of its market cap.
Many have questioned what Apple will do with this cash. Already, Apple has initiated a dividend for shareholders and announced that it would be increasing the dividend as of February.
Still, the question remains, what will Apple do with all of its cash? It could buy-back stock; it could increase the dividend; or it could buy other companies.
With lots of cash on its balance sheet, Apple could target some large companies. In fact, just using market capitalization as a measure of the value of the company, Apple could buy the sixth through tenth largest technology stocks traded in the United States. So what would it look like if Apple bought any of these companies?
Target Number 1: Visa Inc. (NYSE: V)
With a market capitalization of $106 billion, Apple could buy out the financial transaction processing and credit card company with a premium. With Apple's push to beat Google (NASDAQ: GOOG) to develop a mobile wallet, purchasing Visa would actually make sense.
The move would also help to bolster Apple's financial position as it could move in-house financing programs and even offer Apple credit cards.
Target Number 2: Cisco Systems (NASDAQ: CSCO)
Currently, Cisco has a market cap of $112.13 billion, making it ripe to be taken out by the behemoth that is Apple. Apple could integrate the switches business as well as the other smaller businesses into its model and make Apple a one-stop shop for computer and networking services.
Also, Cisco has been a consistent dividend payer and could increase Apple's cash flow to shareholders.
Target Number 3: Qualcomm (NASDAQ: QCOM)
Apple could also look to buyout Qualcomm and expand into the wireless networking business. With Google's secretive push into developing next generation wireless and wired networks, Apple could be forced to compete with its bitter rival by expanding into the business as well.
Currently, Qualcomm's market cap is $110.6 billion, just large enough for Apple's monstrous cash pile.
Target 4: Intel Corp. (NASDAQ: INTC)
Vertical integration would be the theme if Apple were to buy Intel, the chip maker with a market cap of $104.58 billion. This purchase makes a lot of sense because Intel has patents on production processes for chips that allows it to make better chips than some of its competitors.
Should Apple purchase Intel, it could design its own chips that would optimize performance in all of its products and it would also allow Apple to profit from competitors devices through sales of chips to other companies.
Target 5: eBay Inc. (NASDAQ: EBAY)
Apple already has the iTunes store, its own App store, and the Apple store for purchasing Apple products. Imagine if Apple could go one step further and allow customers to bid on products, services, or apps in an auction style, making much more efficient markets.
Buying the online retailer with a market cap of $72.72 billion would also give access to the Paypal service for Apple, which has been hugely profitable for eBay.
Is it likely that any of these deals will happen? Of course not, but it is an interesting thought exercise to show the insanity of how large Apple's cash position currently is.
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