Rumor: Apple considering purchase of ARM holdings

Wed, Apr 21, 2010

News, Rumors

There are rumors, and then there are doozy’s. This one’s a doozy.

The London Evening Standard reported late Wednesday night that there is speculation that Apple is considering purchasing ARM Holdings, the Cambridge-based company that licenses the chip designs for almost any mobile product you can think of – iPhones, iPods, Blackberries, HTC phones, Nokia phones, Sony PSPs, Nintendo DS’, routers, and the list goes on and on.

One trader interviewed by the Standard observed, “A deal would make a lot of sense for Apple. That way, they could stop ARM’s technology from ending up in everyone else’s computers and gadgets.” Either that or Apple could license the technology out and try to recoup some of their purchase price, though such an acquisition would inevitably raise some thorny legal issues for Apple.

Now as for cost, a rough number for an Apple/ARM takeover was estimated to be in the $8.1 billion range, a hefty amount to be sure, but well within Apple’s means considering that they have $41.9 billion in cold hard cash sitting in the bank.

To put the $8 billion figure into context, the highest Apple has ever paid for another company was $278 million when it purchased PA Semi back in 2008. And when you factor in that Apple tends to shy away from large non-surgical acquisitions, this rumor certainly seems too grandiose to actually come to fruition.

Still, at an Apple shareholder meeting this past February, Steve Jobs reitterated that Apple wasn’t keen on paying dividends out to shareholders, and that they instead prefer to keep a lot of cash on hand in order to make “big, bold” purchases when opportunities arise.

“We know if we need to acquire something – a piece of the puzzle to make something big and bold – we can write a check for it and not borrow a lot of money and put our whole company at risk,” Jobs explained, “The cash in the bank gives us tremendous security and flexibility.”

So might Apple actually purchase ARM Holdings? We doubt it, but if it’s a bold acquisition Jobs is after, then this one fits the bill to a tee.



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