What companies Wall Street bankers think Apple should buy

John Gress | Reuters

Tim Cook, Chief Executive Officer of Apple Inc., takes a selfie with a customer and her iPhone as he visits the Apple Store in Chicago, Illinois, U.S., March 27, 2018.

Apple has a growth problem. With no game-changing product on the horizon (that we know of), it might finally make sense for Apple to acquire a company that can give it renewed life and change its Wall Street narrative.

This would be highly unusual for Apple. More bluntly, it would be unprecedented. Apple ended the fourth-quarter with $237.1 billion in cash on hand and $130 billion in cash. Yet the company’s largest acquisition ever was just $3 billion — its 2014 deal for Beats Electronics, the headphone-maker and streaming music company founded by rapper and producer Andre Young (Dr. Dre) and music executive Jimmy Iovine.

The company has lost more than $450 billion in market value since Oct. 3. Slowing demand for iPhones and worse-than-expected sales in China led the company to lower its revenue forecast for the first quarter by as much as $9 billion. Shares fell the most in six years yesterday.

Recently, CNBC asked a handful of Wall Street bankers if they thought Apple would finally make an acquisition of significance, given the company’s recent woes. To a person, the answer was no. It’s not in Apple’s DNA, they said. There are too many cultural challenges with buying a large company for Apple, they said. Apple would get torched by the market for doing a big deal now after losing hundreds of billions in market value, they said.

But, some said it feels like Apple should buy something — even if it probably won’t. CEO Tim Cook told CNBC’s Josh Lipton on Wednesday that the door on a large acquisition wasn’t entirely shut.

“We look at many, many companies including very large companies,” Cook said. “We’ve elected so far not to do those because we haven’t found one that we say, ‘wow, that’s a nice intersection with Apple.’ But I’d never rule it out.”

So what would make sense for Apple? Here are some ideas from bankers.

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