Apple (AAPL) Needs Price Cuts in China and Content M&A - Wedbush
In a note this morning on Apple (NASDAQ: AAPL), Wedbush analyst Dan Ives said the company needs to address its iPhone pricing strategy in China. In addition, Ives said the company needs to make a content acquisitions as it plays catch up in the sector.
Ives said with lower priced competition from Huawei, Xiaomi and others in China, Apple needs to make sure that over the next few quarters they do not lose any current iPhone customers and thus "speaks to the more significant price reductions on the way," He said this is a "smart and necessary strategy" for Apple as this is an installed base story going forward.
In the content arms race, Ives said Apple is playing from behind the eight ball as Netflix, Amazon, Disney, Hulu, and AT&T/Time Warner all going after this next consumer frontier. While acquisitions have not been in the Apple DNA, "the clock has struck midnight for Cupertino in our opinion and building content organically is a slow and arduous path." He said this highlights the clear need for Apple to do larger, strategic M&A around content over the coming year to "double down" and drive the services flywheel.
He said the highest probability M&A targets for Apple in content are:
Medium probability M&A targets for Apple in content are:
Low probability M&A targets for Apple in content are:
- Netflix (NASDAQ: NFLX)
- Disney (NYSE: DIS)
- Gaming platform/video game publishers (NYSE: EA) (NASDAQ: ATVI) (NASDAQ: TTWO)