What if Apple bought out Sony?
A possible takeover is only speculation, but the 2 tech giants do have a few things in common.
By Jeff Reeves, editor of InvestorPlace.com
Both companies have redefined gaming, too -- Apple with its emerging App Store and convergence devices that are both useful and fun, and Sony with its groundbreaking PlayStation 2 system, which remains the best-selling video game console in history.
So what would happen if the creative minds at both companies joined forces to create a new generation of gadgets? Shares of Sony rose in premarket trading Tuesday amid speculation that the Japanese electronics maker could be acquired by Apple.
The source of the buzz was a column by Eric Savitz posted at Barron's over the weeked in which Savitz noted comments from chief executive Steve Jobs suggesting Apple could "use its cash to make a strategic acquisition or two" -- such as Abobe (ADBE), Sony or even Disney (DIS). Adobe is a more digestible $14 billion company, while Disney is almost twice the size of Sony at a whopping $67 billion.
"But," Savitz writes today, "that was pure speculation."
Apple is cash-rich, with $23 billion in loose change and about twice that in short-term securities that could become liquid in a hurry. Sony's market value is a bit shy of $34 billion, a huge chunk of change but certainly not outside Apple's reach. Post continues after video:
- Related Article: The iPad May Beat Nintendo at Its Own Game
But neither company is talking, and a number of analysts have been skeptical of such a deal, suggesting that any move by Apple would likely be a hostile takeover. And despite lots of love for Apple in the states, such a bid would have a hard time succeeding in Japan.
So how likely is a deal? Well, there's no doubt Jobs and company would love to get a piece of Sony's established gaming operations. The potential of a marriage between Sony's portable PSP console and the iPhone and iPad is obvious. Besides, though Apple is getting a cut from games sold in its App Store, it is taking a cut of only about a third from sales. Gaming hardware generates much bigger margins.
- Related Article: Sony’s PSP2 to Feature Touch Pad, HD Graphics
But any consumer who has prowled the electronics section of a big-box store knows that Sony is an octopus of a company that makes televisions, car stereos and digital cameras -- not to mention manages movies and software studios on top of managing a catalog of music.
Perhaps the biggest hurdle to any deal is that weak consumer spending and a downward spiral of computer and HDTV prices have slashed the margins on many Sony products. Judging by anemic profits recently, including quarterly losses in two of the past four periods, it doesn't appear that trend will end anytime soon.
- Related Articles: Verizon iPhone Rumors - Is VZ Customer Service Being Trained for iPhone support?
But if anyone can turn around Sony and put a premium price tag back on its products, it would be Apple. Consumers and investors will have to wait and see, but in the intervening days it sure will be fun to read about any potential products such a partnership would create.
iPlayStation, here we come!
Jeff Reeves is editor of InvestorPlace.com. As of this writing, he did not own a position in any of the stocks named here. Follow him on Twitter at http://twitter.com/JeffReevesIP.
Is this guy on crack? Apple's ****ty game app, in my opinion, does nothing to redefine gaming. Give credit where credit is due. Companies like Microsoft, Sony, and Nintendo have redefined gaming. Any REAL gamer would know that.
i agree this the most utterly disturbing thing to happen in the history of all time. and i know disturbing i was almost raped....
I for one, will not support sony anymore if apple buys them out, and I belive they would loose a massive loyal customer base that sony has.
Apple seems to have an issue of saying this is ours product, and we desice if you are allowed to connect it to something else, they use priatery connector and hardware as much as they can so you are forced to buy their product. They also force tech down your mouth and dictate how you should use it..
Ie. phones. sending images.. also their new antine problem, look at I pad, refusal to work with other software, look at I pod, connection type. dont get me wrong they come out with cool stuff, but they force it so hard, dont see why ppl dont use better stuff.
like a lot of ppl. I own a ton of sony, TV, PS, Recivers, sperkers, systems. ect... I would never buy another since within in 10 years they would destroy sony brand.
They are a perfect match. Although Sony electronic products are easly the best in the world, their consumer base is dwindling due to all the proprietary DRM crap they have built in in all their hardware - a pressure from Sony Entertainment no doubt.
Even HDDVD was a winning format due to its openess until Sony outright bribed the studios with billions in cash for not supporting it.
BluRay ROM is an incompatible piece of crap that constantly puts spyware on your computer and Sony MP3 players are a joke due to DRM.
Sony notebooks are overpriced crap with inferior specs and infested with DRM software.
All of the above can be said about Apple too... Except all their hardware is crap also.
under a strategic point of view, it'd make a lot of sense for apple:
1) Sony's TV-making expertise/brand would support the move to Web-TV which is the hot new thing these days
2) Sony's computer expertise/brand: good support to go right into Microsoft's playing field and start aggressively developing/marketing software solutions and operating systems for non-macs
3) tech expertise to further expand their mobile phone market
4) use sony's video games hardware presence/knowledge to bring video gaming online and on web TV
5) expand the Asian market precence, knowledge and reach instantly (the marke to be for the years to come)
The only problem is that a cultural match of Apple (posterchild of American business culture) with Sony (don't know much about sony but...they're japanese and, well...not exactly a match with the american professional/corporate culture). This is a big risk BUT...makes a lot of sense strategically.
If i was apple, I'd scout around for another takeover prospect before buying out Sony. Cash is not an issue. Strategical value is not an issue. But assimilation is a big issue in this case.
If they go for it and they succeed...it could bring massive value and synergies. If they fail...they'll loose billions and take a hit in a key market such as the Asian market.
Tough call. I wonder who else they could be considering as a takeover prospect.... :-)
The Sony PS2 is in fact the best selling console, it still sells consoles and games on a regular basis, and has been doing so for a very long time. Obviously game and system sales have tapered off since the emergence of more up to date systems they still do sell games. In regards to the article I also think this would be aweful. I see the benefits for Apple, but none for Sony... especially in Japan where it is clearly a part of power and history.
Sony could do with a bit of better management. They're making some of the same mistakes Sega did, where the Japanese side started ignoring the Western market too much.
On the other hand, I think this rumor is hogwash. Where did it get started? What kind of remote evidence even caused this rumor to spark? Or is this just some person on the internet just saying this at random, hoping to get a bunch of people talking?
The rumor just seems unfounded. So yes, you can call me a skeptic. Without any little move towards such a decision, the rumor holds no weight. I'm almost shocked the markets actually reacted to this.
Ok. I might as well see if the markets react to me just saying that Lady Gaga might purchase a bunch of Sony shares, next week!
MORE ON MSN MONEY
Copyright © 2013 Microsoft. All rights reserved.
Quotes are real-time for NASDAQ, NYSE and AMEX. See delay times for other exchanges.
Fundamental company data and historical chart data provided by Thomson Reuters (click for restrictions). Real-time quotes provided by BATS Exchange. Real-time index quotes and delayed quotes supplied by Interactive Data Real-Time Services. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by SIX Financial Information.
In the never-ending contest for sales, American carmakers are pulling ahead.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.