Is Apple Becoming A 'YES' Player?

| About: Apple Inc. (AAPL)
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Summary

With Yahoo sale dragging on, Apple might want to explore some options.

Recent filings show company may want to sell excess energy.

Search ad business for apps could be extremely lucrative.

Last week, there was no extraordinary news regarding Apple (NASDAQ:AAPL) that would make investors change their mind instantly about the company. Perhaps that is why none of the five trading days saw the stock's volume even close to the three month daily average. But there were some interesting small tidbits of news that could become important over time, and they can be thought of as "YES."

Y is for Yahoo (YHOO):

It seems like the bidding process for Yahoo's core assets is taking forever. There are many complex parts, so bidders are going over a mountain of data. Some of the key players, such as Verizon (NYSE:VZ), may not be interested in all of what Yahoo has to offer. That is where I believe Apple could come in.

Yahoo is looking to monetize a portfolio of about 3,000 patents, as well as some real estate assets. I'm sure the real estate assets could be useful down the line, especially if they are in crowded Silicon Valley, but the statement from Yahoo on its patents could be more interesting, as detailed in the article linked above:

This represents a unique opportunity for companies operating in the internet industry to acquire some of the most pioneering and foundational patents related to web search and advertising.

Apple spent $3 billion on Beats and $1 billion for a stake in Didi, so with plenty of cash still on the books, Apple should sniff around a bit. I would be highly surprised if there was nothing in Yahoo's block that could help Apple, since these patents date back to 1996 and are supposedly related to Yahoo's original search technology, e-commerce, and online advertising. The last part may be key, because when you get down to the "S" segment you'll see why there may be a good combination here.

E is for energy:

Like a number of firms, Apple is committed to going green. The company has built solar farms in Cupertino and Nevada in order to use more renewable energy. But what if those solar farms generate more electricity than Apple is able to use? Well, it seems as if there is a solution to that issue.

Last week, 9to5Mac reported that Apple has created an energy subsidiary ("Apple Energy") in an effort to sell excess electricity across the US. Because Apple is not aiming to make a big move in the energy business, it is applying to sell that excess electricity at market rates. There is also the possibility of Apple looking down the road at its electric vehicle, but that's a few years out it seems. For now, it would make sense for Apple to sell its excess electricity, and while you won't see any meaningful impact to the income statement, any extra revenues are always welcome.

S is for search:

Last week, Apple SVP Phil Schiller, recently put in charge of the App Store, confirmed that the company will begin showing search adds for apps within the App Store. This is an effort to takes on the likes of Google/Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) and Facebook (NASDAQ:FB). As the SA market current linked above states, it is believed that Facebook generates billions in revenues from its app ad business.

Apple is looking for ways to diversify the business beyond hardware, and we've heard a lot in recent months about the growing services business. If Apple were to get some patents related to online advertising, it could built out its platform even more. Hopefully, Apple can use app ads to further bolster revenues and earnings generated from the App Store. For more details on how all of this will work, read this article.

Final thoughts:

None of the items I discussed today seem individually flashy, but you can't spell sexy without the letters y, e, and s. While Apple investors are looking for big headlines out of the company, especially at this week's developer's conference, it is under the radar moves like these that are helping to form the company's future. Selling excess electricity and small ads may not add up to billions right away, but anything that can help stem current revenue declines is definitely welcome. Perhaps Apple should sniff around at some Yahoo assets as well, hoping to find the "X" factor that could make all of this look rather sexy.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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