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This precisely supports the point that Apple carefully avoids the kind of value destroying acquisitions, that shareholders might need to be concerned about. In
by gress 13y ago
This precisely supports the point that Apple carefully avoids the kind of value destroying acquisitions, that shareholders might need to be concerned about.
In the case of fingerworks, it would seem to have been a fantastic act of value amplification for Apple.
- smackfu 13y agoWell, you turn a company that can sell to anyone in the industry and make a profit, into one that can only sell to one customer and makes zero profit. The former is generally going to be valued higher than the latter.
- gress 13y agoThis makes no sense. The companies Apple acquires are not turned into anything. The personnel and technology are absorbed and deployed in the creation of future products, many of which are the most popular in the world. Value is magnified - not destroyed.
- smackfu 13y agoThe question is whether the total value the company adds to Apple is greater than the total value that company would have had over its lifetime if not acquired. That doesn't mean it's a bad move for Apple to make the acquisition, but it may "destroy value" in the process.
- gress 13y agoThe total lifetime value is reflected in the price established by the market at sale time. Value is not destroyed.
- nitrogen 13y agoI suppose one could consider two types of value destruction. The kind that would bother shareholders is the kind that buys a company for $1e9, then writes it off as a loss when that company turns out to be worthless. FingerWorks is not this kind. The other kind, the kind that bothers consumers, is the kind that buys a company to keep the technology away from competitors and open source projects. FingerWorks definitely fits this description. I hope the same does not hold for PrimeSense.
- gress 13y agoThe piece is about the concerns of shareholders, so this other kind of value destruction is irrelevant in this context. But even if it were relevant, it's still not value destruction because future cash flows are incorporated into the sale price. I.e. Whoever is selling it thinks they'll get more for it than if they operate it themselves. In this case consumers simply aren't generating enough demand to support the product - i.e. they aren't valuing it as highly as the acquirer does. So the acquisition creates value.
- kirtijthorat 13y agoApple’s ubiquitous touchscreen came from the FingerWorks acquisition and it actually added value for sure but their recent acquisition "PrimeSense" an Israel based 3D sensor company sure makes me thinking. It would be interesting to watch how Apple wind up deploying PrimeSense technology in next-gen iDevices especially iPhone 6. I look forward to seeing this happens.