Apple Inc. (AAPL) Needs Netflix, Inc. (NFLX), Einhorn Needs Patience, Investors Need Answers

Where’s the next leg of growth coming from?
What’s next is certain to be a hot topic at the meeting. These days it’s rumored to be the iWatch and the iTV, with the latter being the most anticipated. But can it disrupt the market? Apple would need to hit a home run on its first plate appearance. Given current conditions, it can’t miss and expect to recover. Apple needs to buy Netflix, Inc. (NASDAQ:NFLX). Given Netflix’s $10 billion market cap, it would only cost $12.5 billion, or 9% of its cash to close the deal. In return, given Netflix’s 27 million domestic subscribers, Apple could potentially generate $30 billion in smart TV unit revenue.

As great as Netflix, Inc. (NASDAQ:NFLX) is, content costs are still an issue. That House of Cards cost $100 million was a perfect example. It’s a good show. But the math doesn’t add up. Besides, Netflix is already at a competitive disadvantage to Apple and Google in digital ecosystems and price/margin. Carl Icahn and others would take Apple’s offer and run. For Apple, an iTV would essentially be a 60-inch iPad. But adding Netflix and making it exclusive to Apple-only devices would immediately render all rivals irrelevant, including Google and Samsung — pretty shrewd. Apple has always had a good-guy image. But the next leg of growth is going to require a killer instinct. Its future depends on it. Investors demand it. And I think Einhorn would be pleased.

The article Apple Needs Netflix, Einhorn Needs Patience, Investors Need Answers originally appeared on Fool.com and is written by Richard Saintvilus.

Fool contributor Richard Saintvilus owns shares of Apple. The Motley Fool recommends Apple, Google, and Netflix. The Motley Fool owns shares of Apple, Google, and Netflix.

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