Apple Buys Shazam

A story which was recently broken by The Globe and Mail has indicated that Apple Inc. (NASDAQ:AAPL) has entered into discussions to buy digital music identification application company Shazam Enteratinment Ltd. for a reported $400 million.

This purported transaction is a long time coming for some analysts who have predicted this application would be on-boarded into Apple’s stable of companies, given the current level of integration between the two companies currently. With Shazam’s technology seamlessly integrated into the Siri software underpinning Apple’s iPhones, the ability of Apple’s management team to have more control over how the software is used and create synergies for its iTunes and music segment appear to be a great opportunity for both parties in this transaction.

Apple’s key motivation in the deal may be to increase its market share among music streaming services companies, with Apple currently trailing behind rival Spotify in terms of the number of users choosing Apple’s streaming service currently.

In terms of cash flow diversification (and cash flow creation), Apple stands as a king among men in the corporate world, so to speak. With a market capitalization hovering around $900 billion and expectations that Apple could become the first American company to top the $1 trillion valuation market on the horizon, a few more "Shazam-like" acquisitions may be all the company needs to take it, and investors, over that psychological threshold.

Invest wisely, my friends.