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Citi analysts think Apple will soon acquire Netflix

By Sheetal Sukhija, Bahrain News
03 Jan 2018, 03:24 GMT+10

CALIFORNIA, U.S. - While speculations are rife that Apple might be planning to counter Netflix by launching its own video subscription product this year - some analysts think otherwise.

According to analysts at Citi, Apple is more likely to take advantage of U.S. President Donald Trump’s corporate tax cut and acquire Netflix. 

Citi analysts Jim Suva and Asiya Merchant said that there is 40 percent chance that the iPhone maker will buy Netflix, considering that the company has nearly $250 billion in cash.

Under the new taxing rules, Apple will be able to repatriate about $220 billion in cash to the U.S.

Suva and Merchant were quoted as saying, "The firm has too much cash - nearly $250 billion - growing at $50 billion a year. This is a good problem to have. Historically, Apple has avoided repatriating cash to the U.S. to avoid high taxation. As such, tax reform may allow Apple to put this cash to use. With over 90 percent of its cash sitting overseas, a one-time 10 percent repatriation tax would give Apple $220 billion for mergers and acquisitions (M&A) or buybacks.”

Meanwhile, one report noted that iTunes has been a huge hit for the company, but viewers have migrated increasingly to services like Netflix, Amazon or Hulu to watch their favourite shows leaving Apple struggling to offer a compelling TV or movie offering.

In September last year, reports claimed that Apple might lease the Culver Studios in California as it plans to pour $1 billion into TV and movie productions.

With the battle for good movie scripts and television projects intensifying in the Silicon Valley, Apple has already hired top Hollywood talent duo Jamie Erlicht and Zack Van Amburg to lead its Hollywood push.

The tech giant is reportedly also developing a new TV show that will star Reese Witherspoon and Jennifer Aniston.

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