This column has been updated from Feb. 17 to note a Financial Times report stating Apple held investment talks with studio Imagine Entertainment that fell through.
It goes without saying that Apple (AAPL) has long had a unique way of doing things, one that eschews a lot of practices -- whether having to do with hardware development, software licensing, acquisitions, employee management or the structure of business units -- that many other tech giants regard as standard operating procedure. Back in 2008, Wired magazine ran a lengthy column entitled "How Apple Got Everything Right By Doing Everything Wrong," and the tremendous iPhone-fueled growth the company has seen since then has done plenty to validate that thesis.
But as global smartphone sales growth slows and PC and tablet sales remain pressured, Apple's one-of-a-kind business philosophy might now be preventing it from tackling big new markets in any significant way.
On Wednesday, Bloomberg, relying on sources who have worked with Apple on its M&A efforts, took a look at the factors that have kept Apple from making large acquisitions, at least save for its $3 billion purchase of high-end headphone maker Beats back in 2014. Apple's "aversion to risk, reluctance to work with external advisers such as investment banks and inexperience in closing and integrating large takeovers" were all said to be impediments.
The news service also pointed out that Apple's historical preference for building products internally rather than acquiring them has been an issue, and that it "dictates terms and tells targets to take it or leave it." That approach often works better with startups with interesting technology and big questions about how they'll monetize it -- Apple has bought quite a few such companies in recent years -- than it does with larger, more established firms.
And on Thursday, the Financial Times reported Apple "has considered a range of acquisitions and targets" in Hollywood, but has failed to strike deals. It adds Tim Cook and other Apple execs recently discussed investing in -- if not fully acquiring -- film/TV studio Imagine Entertainment as part of a deal in which Apple would get to distribute Imagine's content before others, but that talks fizzled out.
Imagine co-chairman Michael Rosenberg replied to the story by saying it's "not accurate," but didn't elaborate.
Over the last year, Apple has been reported to have held takeover talks with media giant Time Warner (TWX) , now set to be acquired by AT&T for $85 billion. It has also reportedly talked with British supercar maker McLaren, and Imagination Technologies, the supplier of the GPU core designs used within Apple's A-series processors.
There has also been speculation (but no firm reports) that Apple could bid for Netflix (NFLX) to further its media ambitions. Tesla Motors (TSLA) , which held talks with Apple's M&A chief back in 2013, is seen as a possibility as well. Netflix and Tesla sport $62 billion and $43 billion valuations, respectively, and would likely demand sizable premiums in any deal.
The fact that Apple is sitting on $230 billion in offshore cash, and that it might soon be able to repatriate this cash at a 10% tax rate if President Trump has his way, has naturally led to increased speculation about a Netflix or Tesla-caliber deal. So has the fact that Tim Cook has repeatedly said Apple is open to making a larger deal.
But as Bloomberg indicates, there seem to be major cultural hangups that affect Apple's willingness to pull the trigger on certain acquisitions, as well as its ability to successfully negotiate and close larger deals. Moreover, when looking at massive potential targets such as a Netflix or Tesla, one also has to consider how well Apple's organizational structure is suited to integrating such companies.