Apple has been left very cash rich after the polarising corporate tax cut championed by US President Donald Trump and the Republican Party was signed into law last month.
Under the new tax bill, which was rubber stamped before Christmas, Apple will be able to bring US$252 billion of its overseas cash back to the United States at a tax rate of 15.5 per cent versus the previous 35 per cent, DailyMail.com reported.
Once all tax are deducted Apple would have a cool US$220 billion war chest burning in their pockets.
With all that spare cash lying around, talk is now turning to what companies Apple might try to bring under their empire, and one stands out above all others according to CitiGroup analysts – Netflix.
In an investors note last month, analysts Jim Suva and Asiya Merchant said there is a 40% chance that Apple would make a play to buy Netflix once their cash was repatriated.
“Apple has too much cash — nearly $250 billion — growing at $50 billion a year,” wrote Suva and Merchant.
“This is a good problem to have. Historically, Apple has avoided repatriating cash to the US to avoid high taxation. As such, tax reform may allow Apple to put this cash to use. With over 90 per cent of its cash sitting overseas, a one-time 10 per cent repatriation tax would give Apple $220 billion for M&A or buybacks.”
It would make sense for Apple as they have struggled for years to offer a compelling TV or movie streaming service.
iTunes has been a success for Apple, but viewers have started to move increasingly to services like Netflix, Hulu and Amazon Prime to watch their favourite shows and movies.