Sony shares have moved up recently on rumors that the company might be bought by Apple. Apple could easily afford the deal. It has over $50 billion of cash on its balance sheet, and a market cap of $282 billion. Sony’s market value is less than $34 billion. Apple could easily afford the deal as Sony’s market value is less than $34 million, and Apple having over $50 billion in cash, but Sony is not “part of Apple’s DNA,” said an analyst.
Apple might like to own Sony’s gaming operation, which manufactures and sells the PlayStation line of products. Apple does not have a position in the market, which is dominated by Sony, Microsoft, and Nintendo. The Apple App Store does offer online video games, but by industry estimates Apple only keeps one-third of the revenue from those and obviously has no hardware presence in the industry. But, Sony is a very messy company, so Apple would probably have to dispose of some of the Japanese firm’s businesses. Sony owns a large movie studio. Apple is in the content distribution business, and its content partners would probably not want to see Steve Jobs as a direct competitor.
Sony and Apple also came up in discussion the week before in Bloomberg’s piece on Apple, when former CEO John Sculley revealed that Steve Jobs wanted Apple to be more like Sony and less like Microsoft. Analysts were skeptical of the possible deal, saying that any potential acquisition of Sony would be a hostile takeover, and that Sony wouldn’t willingly allow itself to be bought.
Brian Marshall, an analyst at Gleacher and Company, said that “Apple wants strategic assets” and that “Sony is not a strategic asset,” IBTimes.com reported. Marshall added, “I don’t see anything in their arsenal that Apple would want. Five or ten years ago Sony was Apple’s number one competitor. However, they failed to initiate on the software side and didn’t build any of their assets.”
The latest rumor, which drove shares of Sony up nearly 3% in Asian markets Tuesday, is that Apple is thinking about buying the company that invented the Walkman. Jobs may have once admired Sony but, as Asymco’s Horace Dediu points out, “the company today contains nothing of value to Apple.”
Apple might be tempted to keep Sony’s digital camera and TV screen business. It would have to suppose that the Apple brand would help sell the products at premium prices. There is, however, the problem that the two businesses have low margins and are in extremely competitive markets.