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Apple buying Facebook? Fuggedaboutit . . . they're just good friends

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By Noel Young, Correspondent

August 20, 2012 | 3 min read

With Apple shares hitting their highest point ever today at $660, and Facebook recovering slightly to $19.85 - still close to half their IPO of $38, the question is being asked again : Will Apple buy Facebook?

Facebook and Apple . . . just good friends

The question was asked (and answered) by Money Morning USA a few days ago and is now making its way round the internet.

The story goes that because Apple has so much cash – $117 billion as of the June quarter – and lacks a presence in social media, buying Facebook just makes sense in the view of some pundits. Those with more level heads are said to think such a move would be "a spectacularly bad idea – and extremely unlikely".

Money Morning (USA) Chief Investment Strategist Keith Fitz-Gerald put it "I can see Microsoft making a stupid decision like this but not Apple .

“ MSFT has a history of overpaying for questionable assets, being late to the game and having lost what truly innovative mojo they had under CEO Steve Ballmer’s watch.

"I think Apple knows that the Facebook model is kaput and that it’s not profitable – very similar to Google in that regard, which has held off from really rolling out Google+."

Whether there is a takeover or not, Apple Chief Executive Officer Tim Cook has hinted at a cosier Apple-Facebook relationship.

Calling Facebook a ‘great company’ at the D10 conference in May, Cook said, "We have great respect for them. I think we can do more with them. Just stay tuned on this one."

Facebook’s shaky business model isn’t the only reason Apple would shy away from buying it..

At today’s price of $18-$19, far below its IPO price of $38, FB has a market cap of about $44 billion. That’s much, much more than any acquisition Apple has ever made.

The Money Manager view is that that is just not Apple’s style. "One reason AAPL has accumulated so much cash is that it doesn’t overspend on foolish acquisitions, unlike many other big tech companies."

Apple does buy a lot of companies, but they tend to be small and offer technologies Apple wants for a specific purpose.

Most of Apple’s acquisitions range from about $15 million to a few hundred million .

Rocco Pendola in a column on The Street website, put it, “No good reason exists for Apple to spend billions of dollars to get something it could get for much less via an in-house effort or external collaboration.”

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