Apple Inc. (NASDAQ: AAPL) has something Netflix Inc. (NASDAQ: NFLX) does not. That is a platform of hundreds of millions of devices that can receive streaming media. Netflix has something that Apple does not. It has 81 million members worldwide, which dwarfs Apple TV.
Apple’s CEO Tim Cook said as the company released earnings that it may be time for it to make a major acquisition. Depending on how financial experts count Apple’s long-term marketable securities and money it holds offshore, Apple has access to $200 billion in cash. Because of its balance sheet, it also can borrow tens of millions of dollars more at low interest rates.
Apple’s problems can be summed up in its share price, which has dropped sharply. It is down almost 15% in the past month, driven for the most part by a sharp drop in earnings. In the most recently announced quarter:
…financial results for its fiscal 2016 second quarter ended March 26, 2016. The Company posted quarterly revenue of $50.6 billion and quarterly net income of $10.5 billion, or $1.90 per diluted share. These results compare to revenue of $58 billion and net income of $13.6 billion, or $2.33 per diluted share, in the year-ago quarter. Gross margin was 39.4 percent compared to 40.8 percent in the year-ago quarter
Investors worry that sales of its new iPhone SE are weak, and its new smartwatch product died on arrival. That leaves even the most optimistic investor waiting for the iPhone 7 release, probably in September. If iPhone 7 does not draw huge sales, Apple’s trouble could continue indefinitely.
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