1. AAPL is a hardware company. Being a hardware company, they are susceptible to margin compression overtime as competitors are easily able to provide comparable product. Also as a hardware company, it is very difficult to hit a home run product or susceptible to lack of product innovation. Thus, AAPL need to diversify their revenue stream.
2. APPL has many users now that they just need to leverage these millions users. With the many apple product out there including the upcoming AAPL TV, they will need to provide exclusive "content" or provide these "captured" million users or ecosystem automatic service product such as search, sports, entertainment, interests, mail, etc. AAPL buying YHOO accomplish these.
We can visualize using our AAPL iphones, ipad or itv with AAPL providing whatever information or product we need via YHOO. Need search? YHOO has that; need sports info? YHOO has that; need finance info? YHOO has that; need news? Yhoo has that; need mail? Yhoo has that, etc. etc.
3. Also, AAPL will need to compete with GOOG overtime.
Competition is here between AAPL and GOOG. Goog acquiring MOT is now internet and hardware with software business. AAPL, basically hardware only, needs to compete on line with goog. Acquiring YHOO is the best and quick route to equalize their competition and competitive against goog. YHOO will get an buyout offer now to two years; either MSFT, AAPL or FB.
Plus, they would now have the GOOG defector Mayer in their camp. Please stop - makes me want to buy YHOO call options again - I can't afford to lose more! Always thought YHOO was a good fit for AAPL, and finding it strange AAPL hasn't announce a huge special dividend yet to get rid of some of that huge horde of cash before taxes go up. Do they need the cash for something else?
On that thought, I am shopping for a Samsung Note 2 this week, as my iPhone has gotten long in the tooth. Buying a new notebook too to replace my trusty 7-year-old Toshiba, and looked at MacBook Pros. Not all that impressed. Will get another Toshiba - Windows 8 WITHOUT the bothersome touch screen. AAPL is losing its lead.