Apple cash position: Disney merger rumors, dividends, and Beats by Dre


Apple’s ever growing cash position continues to be a focus of investors and merger junkies alike, and even as the company continues to issue dividends and make niche acquisitions, the expectation is ever present that a major merger move may be coming. The latest rumor du jour is that of Apple buying Disney, a move which makes sense on some levels and could prove troublesome on others. But as its recent three billion dollar buyout of Beats by Dre demonstrates, Apple may be more willing to pull the trigger on larger deals than in years past.

During the Steve Jobs era, most of Apple’s acquisitions were of the niche variety: he wanted to acquire a piece of the supply chain to smooth out the manufacturing process, or he wanted a specific indie product so he could assimilate into the Apple staple, or perhaps he merely wanted to gain the employ of a particularly valuable engineer by acquiring that person’s startup company.

The Disney merger possibility, posited this week by Kara Swisher of Re/Code as merely a logical idea and not an actual rumor, is well within Apple’s reach financially. Disney CEO Bob Iger is already on Apple’s board of directors, and the heirs of Steve Jobs are massive Disney shareholders. In fact, Disney acquired Pixar from Jobs a few years back, so the two companies are deeply intertwined. Such a merger would allow Apple to become a movie studio, giving it abundant in-house content for iTunes and its other content-related ventures. But it would also put Apple in a position of having to negotiate with competing movie studios on content deals, which could get tricky.

The larger question may be whether Apple is willing to take on the potential distraction of owning theme parks, television channels like ESPN, hotels, and everything else that would come with a Disney buyout. Does Apple CEO Tim Cook want to spend part of every one of his days dealing with issues that have nothing to do with his core products like the iPhone and the Apple Watch? Then again, in acquiring Beats by Dre, he showed a willingness to take on a multibillion dollar headphone empire and whatever distractions may come with it.