Go Shopping, Apple Inc. (AAPL)!

Given these conditions, here’s my short list of companies that might want to be bought, and that Apple might want to buy:

Adobe Systems Incorporated (NASDAQ:ADBE):  market cap $19.3 billion. Another sign that the influence of Steve Jobs was waning was that Apple executives were willing to say nice things about Adobe last June at WWDC.  Specifically, Phil Schiller gushed about the “great team at Adobe” working on the next Mac version of Photoshop optimized for the Mac Book Pro retina display.  Why would Apple want Adobe?  Well, they happen to be, after Apple and Microsoft, one of the few major software companies still developing for Mac OS, and their product portfolio doesn’t overlap much with Apple’s current offerings.  This would put Apple back in the PC software business, but let’s face it; Adobe could really use Apple’s disciplined approach to software quality control.  Having missed out on the mobile app explosion with the demise of Flash, Adobe’s growth has petered out, with operating income for FY 2012 up only 7% at $1.18 billion.  Apple could re-purpose some of Adobe’s software talent towards Mobile apps with the benefits of enhancing app store revenue and making its mobile ecosystem even more secure.

NVIDIA Corporation (NASDAQ:NVDA):  market cap $8.0 billion.  One hears a lot of loose talk that the graphics card is dead, thanks to on-board graphics on Intel’s Ivy Bridge chips.  What the tech pundits don’t see is that the graphics card has been integrated onto the SOC; and in this role, graphics processors, whether in Intel or ARM based SOCs, are very much alive.  In this application, NVIDIA excels as well.  More relevant for Apple, though, is NVIDIA’s expertise in building ARM processors.  NVIDIA’s new  quad core Tegra 4 represents the absolute state of the art for ARM processors.   Apple currently designs their own dual core ARM processors, but if they wanted to be truly ahead of the pack, buying NVIDIA would put them there.  The discreet graphics chip business could even be spun off if Apple decided it wasn’t worth keeping.  Operating income growth was flat at $648 million for NVIDIA’s most recent fiscal year (ending 1/27/13) with basically flat revenues in NVIDIA’s operating segments except Tegra, which grew 90% y/y in the fiscal fourth quarter.

Both Adobe and NVIDIA are headquartered in Silicon Valley, making the logistics of assimilation a little easier.

Other companies that might be of interest include Marvell Technology Group Ltd. (NASDAQ:MRVL): market cap $5.0 billion, which makes a wide variety of ICs and also dabbles in ARM SOCs, and Imagination Technologies: market cap $2.11 billion, the British firm which designs the graphics co-processors currently found in Apple SOCs.

I believe the right acquisition(s) would do more to restore Apple’s stock price than any form of cash give-back to investors, since it would restore investor confidence in Apple’s basic competitiveness.  Much of that confidence has been eroded by the perception that Apple isn’t up to the challenge posed by both Microsoft and Google.  A bulked-up Apple would do more to soothe investors than a few dollars per share.

The article Go Shopping, Apple! originally appeared on Fool.com and is written by Mark Hibben.

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