I agree that the Facebook idea is implausible. I think dividends are unlikely too. There's no reason anyone at the company would be worrying about the stock price right now, so the question is whether Steve Jobs thinks he might be able to find a use for $50b at some point in the future. That might be to buy something he has a use for, or it might be just to intimidate any potential partner or competitor.
Has it made a difference to Apple's recent history that everyone knows it could buy Adobe? Do the CEOs of AT&T and Verizon have to face the possibility that Apple could buy Sprint and run its own network? I say yes, and I say Jobs likes it that way, and his comments should be interpreted in that light.
That's exactly my point. Adobe's market cap is $15b. Sprint $13.6b. $50b (and rapidly growing) is far more than they need for a very large acquisition, or even two, and they've never shown any appetite for large buys. Not to mention that they could probably easily borrow the amount they'd need to buy either of those so cash on hand is irrelevant as a threat.
There aren't many companies with a market cap higher than half of what Apple is sitting on, and unless you think they're going to get into department stores or oil, most of those few are disqualified.
They're at the same point Microsoft was at in 2003, they have more money than they can plausibly employ. Investors would far rather receive some of it to deploy themselves in other venues, or in more Apple shares.
Jobs will cave soon and begin dividending. Or perhaps he has a large stock buyback in mind.
I really don't see Apple buying Facebook. It's just too far away from what Apple does best.
I can't say your opinion isn't rational, but.. Apple is weird. The iPod was far away from what Apple did best too. As was the iPhone. As was the iPad. I admit, they're all at least hardware, but Apple is pretty diverse and I can at least imagine them taking such a leap (see Logic, iTunes, iWork for software examples).
The iPod maybe, the other two not at all. Apple saw that iPods were going to be subsumed by phones so they made a phone that was the best iPod ever. They saw the notebook market was going to be cannibalized by the low end so they took that over.
The difference in company mentalities is more of a chasm to bridge than the difference in core competencies - "just good enough" rapidly-iterating, free-for-all vs meticulously-planned, elegant and priced accordingly.
There may be things that Applebook (Fapple?) could do that each company separately cannot. This article is still just linkbait speculation, though.
My (personal, not reflecting on my employer, etc) feeling is that Facebook wouldn't take the offer. Zuckerberg doesn't even want to IPO yet because of the limited amount of control he'd give up. Even if Jobs offered every last penny of that $51B, plus stock and a magic pony, I don't think Zuckerberg would take it.
Looks like they go after companies mainly for talent and IP. Facebook's biggest asset is their network effect and 500M eyeballs, not the software or talent, though I'm sure they have a lot of talent. Now that they are designing their own chips, after the PA Semi and Intrinsity buys, maybe silicon would fit the bill as a big aquisition for them - AMD (4.7B) or Nvidia (6.5B).
nVidia is a good buy, but i doubt they would sell. nVidia's stock is at $11 a share and if people were buying more new computers, it would be at $45, if nVidia enters... the CPU market, I think they will hit between $75-100 a share.
AMD is worth way more than their market cap, right now their market cap is depressed because of the tremendous debt. if apple bought AMD, they would probably lay off 2/3rds of the company, retain IP and pay off the debt; which is between $2-$7billion depending on how you count the cards. http://www.fool.com/investing/general/2010/07/26/amd-reshuff...
A better economy might double Nvidia's earning's, so their share price might triple.
Regarding the CPU market, I assume you mean x86 CPU market vs the ARM CPU market they are already a player in. Moving into that market might move their price a little, but increasing it tenfold? When they are entering an established, mature market against a very strong and aggressive player like Intel?
I could easily see Apple wanting to buy or closely partner with AMD in a few years, if things go well for AMD. Certainly, their graphics business is going quite well these days, but the future of their CPU products is uncertain. If both their Bobcat and Bulldozer architectures are successful, then Apple might well be willing to risk alienating Intel. (Not that Intel has been showing any sign that they care if they alienate Apple.)
There would still be the problem that AMD always lags behind Intel in fab technology, which is why they have trouble going after the highest-performance and lowest-power segments. No matter how much cash you have on hand, there's no quick fix for that. At least with Intel CPUs, Apple products can generally match the performance of any competitor, and any price premium can be attributed to the better industrial design, integration, and software. If Apple switched to AMD processors, most of their computers would now be afflicted by a performance deficit in addition to the existing "Apple tax".
NVidia doesn't seem like a tantalizing acquisition for anybody except perhaps Intel, if they can admit that they don't know how to make a good GPU. NVidia has been mostly squeezed out of the chipset and integrated graphics markets by Intel's shady tactics and the awkwardness of AMD now owning ATI, and the discrete graphics war hasn't been going well for NVidia for quite some time, with no respite in sight. (This month, AMD will be releasing their third consecutive generation of GPUs that soundly beat the competition in price/performance comparisons at most price points. NVidia can't really do anything about it in the short term, because their chips are simply bigger for the same performance, so their profit margins are lower. They've been trying to mitigate this by focusing on HPC, but that's not catching on quickly enough, either.)
"If Apple switched to AMD processors, most of their computers would now be afflicted by a performance deficit in addition to the existing "Apple tax"."
Apple could potentially transition parts of its line to AMD processors, without completely abandoning Intel.
It seems likely that Sandy Bridge will be the CPU of choice for workstations, while Bulldozer will be the throughput winner (hence server oriented), and Bobcat the performance/watt featherweight. Of course, none of this is certain until the actual products are available.
Bobcat might not have the performance to match up to Sandy Bridge, but having an AMD/ATI graphics processor could potentially make it a good choice for a souped up AppleTV product aimed a little higher. Ok, quite a bit higher. Serious 3D gaming higher. And I'm pretty sure that AMD would LOVE a design win like that!
The competition from AMD plus the the narrowing margins in CPU's is part of what's leading AMD and Intel toward system on a chip solutions, but although that's bad for the likes of nVidia, it's good for OEM's like Apple.
Doesn't make sense to me. They've already got their own game platform, and devices that are connected to the TV. Why try to integrate a completely different platform into a gaming ecosystem that's already thriving?
Not likely. Bill Gates offered 'name your price' and a golden pony to them, but old Yamauchi declined the sale. Apparently, japanese companies tied to national identity are impossible to buy (for foreigners at least).
I don't have any - I've read it in 'Game Over' book about nintendo, though if you google around for 'microsoft buying nintendo' there are a slew of stories about it.
I don't know the figures of running a telecom but buying a carrier would make a lot of sense. There is a lot of Apple-cash that's being pumped into AT&T.
I've thought that would make sense for Google to do but it would presumably alienate the other carriers and destabilise Android. Apple however doesn't have any such conflicts.
I don't see them wanting to buy Facebook and moreover I can't possibly see Facebook selling to Apple. Their ideologies and goals are far too different.
Apple is not going to buy a mobile phone carrier. They are interested in a product or service that they can shutdown and relaunch into an Apple product as quickly as possible.
Mobile phone companies are not a unique market for Apple that can be i-stamped and sold. All carriers support competitor's products which cannot be easily removed.
Maybe but when they announce iTunes in the cloud there's going to be a massive youth sector for whom mobile access will be a killer feature and who won't be able to get it affordably or reliably from the current carriers.
If Apple were to buy a carrier they could relaunch it with dataplans focussed on kids and transition a massive younger section of the market across to them.
Ten years later that youth market grows up to become the adult market and all of a sudden Apple dominates the carriers too.
Apple is not known for affordable products, nor can they magic a phone carrier towards reliability.
AT&T is a massive company that cannot "relaunch" due to contractual obligations. Even if they did, carriers already offer "kid friendly" plans - unlimited data/text that Mommy and Daddy can pay for.
So the kids transition toward adulthood and iAT&T transitions back towards their successful business model of offering plans for everyone?
Your point about reliability is fair although doubling the capitalisation of a carrier would make a significant dent. However I think you overestimate the inertia of the status quo.
1. Apple doesn't need to relaunch AT&T, Sprint or any other network it simply launches a supplementary branded network like Virgin mobile.
2. The current unlimited data plans are only unlimited in the face of limited data utility. Where people can use massive amounts of data (i.e. the iPhone), unlimited comes at a premium.
3. Although Apple is revered for its high end products its iOS marketshare is 41% iPod touch and most of its device sales come from low end products like the iPod touch and the nano. It's now no stranger to mass market affordability.
I don't know if it would be good for Apple to own a carrier. Right now the iPhone is in a good place: everything awesome about it is attributed to Apple, while everything crappy about it can be blamed on AT&T. Calls drop all the time? Crappy reception? That's AT&T.
If Apple suddenly becomes responsible for the whole shebang then it'd probably tarnish their brand somewhat. I'd imagine that's why they came out swinging after "Antennagate": for the first time people could blame Apple for some of these AT&T-issues.
By my calculations they could buy the following companies for cash at a 20% markup to become totally vertically integrated on a scale not seen since the days of Standard Oil:
ARM - Market cap 8.3B
CableVision - Market cap 8.13B
EA - Market cap 5.21B
Netflix - Market cap 8.01B
Sprint - Market cap 13.64B
Of course it will never happen but it's fun to think about.
I really think they should buy ARM. People say there would be a conflict, but ARM licenses architecture and designs, rather than selling chips, and the existing licensees would surely continue, and there's nothing stopping apple from selling new licenses. But having the ARM design team available to task for custom designs for apple (to be licensed as well to others, or not) would be worth about $8B, in my opinion. (given the size of the iOS market already.)
The rest of those are bad choices for Apple. Apple is what it is because it focuses. I think none of those companies are in Apple's focus.
However, Apple could buy Clearwire- Clearwire has very valuable spectrum licenses in the USA. This might be justified, but since Apple is a global business, it isn't a slam dunk, as whoever controls WiMax spectrum internationally would need to be contended with. On the third hand, they could use that spectrum to create their own LTE network in the USA, and still have enough spectrum on the side to create a parallel high bandwidth data-only network.
Hmmm.... Clearwire's market cap is $1.6B. They might need to buy sprint too (and then spin out the telecom business) to get full rights to the clearwire spectrum. (not sure about what the agreement is.)
Netflix is a great company with great management. But the streaming rights won't transfer thru an acquisition, I'm pretty sure. However, giving netflix a spot in the iTunes ecosystem seems like a good deal, maybe take an equity stake in the process, sure.
EA- no need to buy them, balloons headcount, very different business. EA will either put out the apps for Apple's devices, or other companies will beat them to it. Apple's in a strong position.
I'm not sure about Cablevision.
I think Apple should buy Adobe, though. I'm sure they still have some talent left, and owning what's left of the desktop software market would be good for Apple.... but that is a "mac primacy" play, and I think Steve and the rest of Apple is focused on iOS exclusively, so I'm sure they won't buy Adobe.
PS-- I realize your point was that they have the capital to buy all those companies if they wanted to, but I'm looking at it as a shopping list.
I'm pretty certain Apple has plans for the $51B. They could spend some of it buying back their stock, or as a dividend, but both of those are non-growth company strategies, essentially giving the money to investors and saying they can't manage it well.
I think Apple has its eye on some very big opportunities.
I think one of those opportunities is putting $10B-$20B into a vertically integrated automated manufacturing facility.
They cannot continue to scale their business on the backs of foxconn. At some point, this is becomes the biggest inefficiency, even though Chinese labor is inexpensive, it won't always be, and when it becomes as expensive as korea or singapore or even japan, where will foxconn move?
I think pure automation is the solution. Foxconn needs to be able to build anything, Apple just needs to build the products it desgins. There is a position to squeeze a lot of cost out.
And the other argument? Apple did it before. The Macintosh factory was a wonder of its age, and extremely automated. IT was designed along with the macintosh.
I think Apple is learning from foxconn, but eventually will need to build their own manufacturing base. Simply because you cannot keep doubling your device numbers forever.... foxconn will still build a lot of stuff for apple, but I'm waiting for Apple to take over a chunk of it.
Apple already has CPU design teams, from their acquisitions of Intrinsity (designers of what's now known as the Apple A4), and PA Semi. The Intrinsity acquisition in particular should have guaranteed that Apple has full licenses to all ARM tech (though given Apple's history with ARM, they probably already did). Since they've already got one of the best ARM design teams around, and a bunch of other experienced CPU designers, they probably wouldn't gain much from ARM itself. It certainly wouldn't be worth the trouble of getting the deal through regulators.
I'm still waiting to see PA Semi put to work though. We've seen Intrinsity's marks on the A4, but still nothing smelling like PA Semi stuff. It's annoying.
as some have pointed out to me over the years, market caps, do not include all private equity. some of these companies might have private equity that is not included in the public stock price.
secondly, when a company with a solid stock price buys a company they don't need to do it for cash, they can do it with stock and conserve cash. some will even debt finance.
3rd, on a 5 year basis, apple has a net of $4-5 billion a qtr or $20 billion a year, so they could probably safely debt finance $100+ billion at 3% or 4%.
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... The cash in the bank gives us tremendous security and flexibility...
You never know what opportunities are going to be around the next corner. We are a large enough business now that, in order to really move the needle, we have to be thinking pretty bold -- pretty large.
There's a decent chance they'd buy ARM Holdings ($8.4B).
They could bring the processor design in-house. ARM chips already power all the IOS devices and could also power their server farms. They could also be planning for iOS/ARM systems to eventually replace their entire desktop and laptop lines.
ARM started out as a joint venture between Apple and Acorn. They would not be able to stop producing chips for other companies, so why would they do that? They already get everything out of ARM that they want, there would be very little benefit to this.
You're right, it may not be necessary. But there is speculation that ARM is on sale and Apple could be planning to expand beyond their current markets.
It might want to purchase an ads company of some sort to start competing with Google more fiercely in the lucrative ad space.
ARM seems unlikely given that their previous purchases have gotten them an ARM license and development team, and its an expensive purchase just for talent.
I would actually go with nVidia -- this would give them both a CPU and GPU firm in-house, and $7 billion is a bargain for that IP and talent, especially since the company is profitable. They also have interesting products coming out -- compute-specific processors and mature technology selling into the high-margin research market, 3D vision, PhysX, etc. -- that Apple could integrate deeply into their other products (Mac Pro, AppleTV, OS X, etc.).
The Blofeld option: wait until they have $100B, buy Verizon, cancel Droid. =)
What they will do: start buying web/cloud companies so that they can offer a credible set of online services to complement the iOS devices. Apple prides itself on an 'integrated experience', but right now that implies an iOS device paired with a PC. I expect them to eventually offer a broader, more Googlian set of online services with tight iOS integration.
(jk, but) Apple buying Tesla, would be bold, big and .... very interesting. BMW would shit their pants. Which would you rather have, an Apple Power Roadster, or an M5?
I agree, as I think Disney is the only other company on the planet that in many ways is a mirror of Apple.
Let us compare:
Founded by a charismatic visionary, check. Highly aesthetic products, check. Fulfilling dreams of fantasy and the future, check. Communities of cult followers, check. Popularity driven by youth culture, check. Spare no expense nor detail to achieve perfection in design, check. I could keep going...
I don't think Apple is interested in Disney. But a company that fits Apple and their revenue streams is Spotify. Many similarities between the companies as well, with focus on design and user experience rather than features.
It makes no sense to me. If Apple thought Facebook's terms for Ping integration were unreasonable, the terms of a deal would likely be even more disagreeable. But even that aside, look at where Apple lacks control currently. They would likely want to plug a shortcoming there. The two places that leap to mind are manufacturing and wireless service. Jobs must be so annoyed that they have to depend on contract manufacturing. One of the primary reasons they didn't move more product this quarter was supply. The Apple of old did a lot of their own manufacturing. Likewise, dealing with wireless network providers has got to be a drag. But buying Clear or Sprint doesn't help internationally as others point out.
no one is going to buy facebook because anyone with enough money to offer a deal that zuckerberg would accept is smart enough to know that it isn't worth that much
53 comments
[ 4.4 ms ] story [ 117 ms ] threadUnless they're planning on buying Wal-Mart, they probably will end up dividending pretty soon. There's nothing better to do with that much money.
Has it made a difference to Apple's recent history that everyone knows it could buy Adobe? Do the CEOs of AT&T and Verizon have to face the possibility that Apple could buy Sprint and run its own network? I say yes, and I say Jobs likes it that way, and his comments should be interpreted in that light.
There aren't many companies with a market cap higher than half of what Apple is sitting on, and unless you think they're going to get into department stores or oil, most of those few are disqualified.
They're at the same point Microsoft was at in 2003, they have more money than they can plausibly employ. Investors would far rather receive some of it to deploy themselves in other venues, or in more Apple shares.
Jobs will cave soon and begin dividending. Or perhaps he has a large stock buyback in mind.
I can't say your opinion isn't rational, but.. Apple is weird. The iPod was far away from what Apple did best too. As was the iPhone. As was the iPad. I admit, they're all at least hardware, but Apple is pretty diverse and I can at least imagine them taking such a leap (see Logic, iTunes, iWork for software examples).
My (personal, not reflecting on my employer, etc) feeling is that Facebook wouldn't take the offer. Zuckerberg doesn't even want to IPO yet because of the limited amount of control he'd give up. Even if Jobs offered every last penny of that $51B, plus stock and a magic pony, I don't think Zuckerberg would take it.
Netflix? Quite affordable: $8B.
Possibly Quark, to ramp up a full publishing assault against Adobe.
Or maybe even Adobe as a defensive move against Microsoft.
Looks like they go after companies mainly for talent and IP. Facebook's biggest asset is their network effect and 500M eyeballs, not the software or talent, though I'm sure they have a lot of talent. Now that they are designing their own chips, after the PA Semi and Intrinsity buys, maybe silicon would fit the bill as a big aquisition for them - AMD (4.7B) or Nvidia (6.5B).
AMD is worth way more than their market cap, right now their market cap is depressed because of the tremendous debt. if apple bought AMD, they would probably lay off 2/3rds of the company, retain IP and pay off the debt; which is between $2-$7billion depending on how you count the cards. http://www.fool.com/investing/general/2010/07/26/amd-reshuff...
A better economy might double Nvidia's earning's, so their share price might triple.
Regarding the CPU market, I assume you mean x86 CPU market vs the ARM CPU market they are already a player in. Moving into that market might move their price a little, but increasing it tenfold? When they are entering an established, mature market against a very strong and aggressive player like Intel?
There would still be the problem that AMD always lags behind Intel in fab technology, which is why they have trouble going after the highest-performance and lowest-power segments. No matter how much cash you have on hand, there's no quick fix for that. At least with Intel CPUs, Apple products can generally match the performance of any competitor, and any price premium can be attributed to the better industrial design, integration, and software. If Apple switched to AMD processors, most of their computers would now be afflicted by a performance deficit in addition to the existing "Apple tax".
NVidia doesn't seem like a tantalizing acquisition for anybody except perhaps Intel, if they can admit that they don't know how to make a good GPU. NVidia has been mostly squeezed out of the chipset and integrated graphics markets by Intel's shady tactics and the awkwardness of AMD now owning ATI, and the discrete graphics war hasn't been going well for NVidia for quite some time, with no respite in sight. (This month, AMD will be releasing their third consecutive generation of GPUs that soundly beat the competition in price/performance comparisons at most price points. NVidia can't really do anything about it in the short term, because their chips are simply bigger for the same performance, so their profit margins are lower. They've been trying to mitigate this by focusing on HPC, but that's not catching on quickly enough, either.)
Apple could potentially transition parts of its line to AMD processors, without completely abandoning Intel.
It seems likely that Sandy Bridge will be the CPU of choice for workstations, while Bulldozer will be the throughput winner (hence server oriented), and Bobcat the performance/watt featherweight. Of course, none of this is certain until the actual products are available.
Bobcat might not have the performance to match up to Sandy Bridge, but having an AMD/ATI graphics processor could potentially make it a good choice for a souped up AppleTV product aimed a little higher. Ok, quite a bit higher. Serious 3D gaming higher. And I'm pretty sure that AMD would LOVE a design win like that!
The competition from AMD plus the the narrowing margins in CPU's is part of what's leading AMD and Intel toward system on a chip solutions, but although that's bad for the likes of nVidia, it's good for OEM's like Apple.
I've thought that would make sense for Google to do but it would presumably alienate the other carriers and destabilise Android. Apple however doesn't have any such conflicts.
I don't see them wanting to buy Facebook and moreover I can't possibly see Facebook selling to Apple. Their ideologies and goals are far too different.
Mobile phone companies are not a unique market for Apple that can be i-stamped and sold. All carriers support competitor's products which cannot be easily removed.
If Apple were to buy a carrier they could relaunch it with dataplans focussed on kids and transition a massive younger section of the market across to them.
Ten years later that youth market grows up to become the adult market and all of a sudden Apple dominates the carriers too.
AT&T is a massive company that cannot "relaunch" due to contractual obligations. Even if they did, carriers already offer "kid friendly" plans - unlimited data/text that Mommy and Daddy can pay for.
So the kids transition toward adulthood and iAT&T transitions back towards their successful business model of offering plans for everyone?
1. Apple doesn't need to relaunch AT&T, Sprint or any other network it simply launches a supplementary branded network like Virgin mobile.
2. The current unlimited data plans are only unlimited in the face of limited data utility. Where people can use massive amounts of data (i.e. the iPhone), unlimited comes at a premium.
3. Although Apple is revered for its high end products its iOS marketshare is 41% iPod touch and most of its device sales come from low end products like the iPod touch and the nano. It's now no stranger to mass market affordability.
If Apple suddenly becomes responsible for the whole shebang then it'd probably tarnish their brand somewhat. I'd imagine that's why they came out swinging after "Antennagate": for the first time people could blame Apple for some of these AT&T-issues.
ARM - Market cap 8.3B
CableVision - Market cap 8.13B
EA - Market cap 5.21B
Netflix - Market cap 8.01B
Sprint - Market cap 13.64B
Of course it will never happen but it's fun to think about.
The rest of those are bad choices for Apple. Apple is what it is because it focuses. I think none of those companies are in Apple's focus.
However, Apple could buy Clearwire- Clearwire has very valuable spectrum licenses in the USA. This might be justified, but since Apple is a global business, it isn't a slam dunk, as whoever controls WiMax spectrum internationally would need to be contended with. On the third hand, they could use that spectrum to create their own LTE network in the USA, and still have enough spectrum on the side to create a parallel high bandwidth data-only network.
Hmmm.... Clearwire's market cap is $1.6B. They might need to buy sprint too (and then spin out the telecom business) to get full rights to the clearwire spectrum. (not sure about what the agreement is.)
Netflix is a great company with great management. But the streaming rights won't transfer thru an acquisition, I'm pretty sure. However, giving netflix a spot in the iTunes ecosystem seems like a good deal, maybe take an equity stake in the process, sure.
EA- no need to buy them, balloons headcount, very different business. EA will either put out the apps for Apple's devices, or other companies will beat them to it. Apple's in a strong position.
I'm not sure about Cablevision.
I think Apple should buy Adobe, though. I'm sure they still have some talent left, and owning what's left of the desktop software market would be good for Apple.... but that is a "mac primacy" play, and I think Steve and the rest of Apple is focused on iOS exclusively, so I'm sure they won't buy Adobe.
PS-- I realize your point was that they have the capital to buy all those companies if they wanted to, but I'm looking at it as a shopping list.
I'm pretty certain Apple has plans for the $51B. They could spend some of it buying back their stock, or as a dividend, but both of those are non-growth company strategies, essentially giving the money to investors and saying they can't manage it well.
I think Apple has its eye on some very big opportunities.
I think one of those opportunities is putting $10B-$20B into a vertically integrated automated manufacturing facility.
They cannot continue to scale their business on the backs of foxconn. At some point, this is becomes the biggest inefficiency, even though Chinese labor is inexpensive, it won't always be, and when it becomes as expensive as korea or singapore or even japan, where will foxconn move?
I think pure automation is the solution. Foxconn needs to be able to build anything, Apple just needs to build the products it desgins. There is a position to squeeze a lot of cost out.
And the other argument? Apple did it before. The Macintosh factory was a wonder of its age, and extremely automated. IT was designed along with the macintosh.
I think Apple is learning from foxconn, but eventually will need to build their own manufacturing base. Simply because you cannot keep doubling your device numbers forever.... foxconn will still build a lot of stuff for apple, but I'm waiting for Apple to take over a chunk of it.
secondly, when a company with a solid stock price buys a company they don't need to do it for cash, they can do it with stock and conserve cash. some will even debt finance.
3rd, on a 5 year basis, apple has a net of $4-5 billion a qtr or $20 billion a year, so they could probably safely debt finance $100+ billion at 3% or 4%.
You never know what opportunities are going to be around the next corner. We are a large enough business now that, in order to really move the needle, we have to be thinking pretty bold -- pretty large.
--Steve Jobs
They could bring the processor design in-house. ARM chips already power all the IOS devices and could also power their server farms. They could also be planning for iOS/ARM systems to eventually replace their entire desktop and laptop lines.
No.
ARM seems unlikely given that their previous purchases have gotten them an ARM license and development team, and its an expensive purchase just for talent.
I would actually go with nVidia -- this would give them both a CPU and GPU firm in-house, and $7 billion is a bargain for that IP and talent, especially since the company is profitable. They also have interesting products coming out -- compute-specific processors and mature technology selling into the high-margin research market, 3D vision, PhysX, etc. -- that Apple could integrate deeply into their other products (Mac Pro, AppleTV, OS X, etc.).
What they will do: start buying web/cloud companies so that they can offer a credible set of online services to complement the iOS devices. Apple prides itself on an 'integrated experience', but right now that implies an iOS device paired with a PC. I expect them to eventually offer a broader, more Googlian set of online services with tight iOS integration.
Let us compare: Founded by a charismatic visionary, check. Highly aesthetic products, check. Fulfilling dreams of fantasy and the future, check. Communities of cult followers, check. Popularity driven by youth culture, check. Spare no expense nor detail to achieve perfection in design, check. I could keep going...
They'll pursue more vertical integration in their hardware and network businesses.