Why Apple Should Acquire Twitter
The Mac maker has plenty of cash to burn and billions more on the way. But is it time for Apple to make its biggest acquisition in company history?
Yes, says hedge fund manager Eric Jackson. The Ironfire Capital founder and managing member recently wrote about this matter on Forbes. While Jackson's points were certainly valid, my view was (and still is) that Google (NASDAQ: GOOG) is much more likely to acquire Twitter than Apple (NASDAQ: AAPL). I explained why earlier this week.
Now Jackson is telling Benzinga why Apple and Twitter are a safer bet.
"[Apple] generated $13 billion in cash for the quarter," said Jackson, who estimates that Apple could acquire Twitter for $10 billion. "Now they're at $110 billion."
But Why Not Google?
Clearly Apple has the financial means to acquire Twitter. But isn't Google just as capable of making an acquisition of this magnitude? The search engine giant did, after all, spend more than $10 billion on Motorola (NYSE: MMI).
"I think there are reasons for Google to buy it," Jackson explained. "But I think if Apple was faced with that possibility that it might lose Twitter to Google -- they've [already] lost Instagram to Facebook, -- I just don't think they would let it happen, and I think they'd pull the trigger on keeping Twitter for themselves. Google couldn't compete in a bidding war."
Jackson said that the thing critics always come back at him with is that Apple has never been a fan of big acquisitions. In fact, the company has yet to do one. "Yeah, but they've never paid a dividend before either," said Jackson. "They said we're not gonna have a smaller tablet, but I think that's going to change. They reserve the right to change their mind. They have a history of experimenting. They try something out, they fail at it. They failed at MobileMe, but they don't just shut it down -- they kind of stick with it. They haven't shut down Ping, [but] it is, by all accounts, a failure. I imagine they've been learning from it. They take the long view."
M&As Are Coming
"They're gonna have to do something," Jackson continued. "I've heard people speculate that Apple is gonna buy a company like Path over Twitter because Path is cheaper than Twitter. They can probably get it for $500 million. It's visually appealing, which suits the aesthetics of Apple. And maybe Apple thinks it doesn't need Twitter. You know, once they slap the Apple name on it, they'll get user growth of their own."
Still, Jackson said that if we assume Apple is going to be a major player in the TV business, "I'm sure they believe that there's going to be a chance to totally rethink how ads are done in TV."
"We know [web] ads suck today," Jackson concluded. "They don't target the right people, and the majority is ignored. So if Apple decides that's gonna be a key part of them being in the TV business -- they're gonna have to ads of some kind, so why not do it well? -- I think Twitter can be a big asset in that strategy."
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