Tech giants Apple could enter the online streaming business by acquiring Netflix according to Jim Suva and Asiya Merchant of the Business Insider. The US Government's corporate tax cut may be the reason behind the deal.
Netflix is the world's leading Internet Television with over 100 million members in over 190 countries enjoying over 125 million hours of TV shows and movies every day including original series, documentaries and feature films. Members can watch as much as they want, anytime, anywhere on almost any Internet connected screen.
The deal is attributed to Apple having 90% of it's cash overseas. A federal tax cut and a one time allowance for companies to bring in cash from foreign markets could result in Apple wielding $250 billion in cash.
"The firm has too much cash – nearly $250 billion – growing at $50 billion a year. This is a good problem to have," Suva and Merchant said to Citi clients. "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% of its cash sitting overseas, a one-time 10% repatriation tax would give Apple $220 billion for [merger and acquisition] or buybacks."
The number of Netflix streaming subscribers has constantly been increasing over the years, surpassing the 100 million mark in the second quarter of 2017.Netflix adds an average of 5 million subscribers per quarter which is approximately 22 million new subscribers per year.
With over 10 billion dollars in yearly revenue, Netflix could be an extremely positive purchase for Apple and could give them a huge footing in the online streaming market.
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