Apple executive Eddy Cue shut down speculation that the company could acquire a media giant like Netflix or Disney.
Apple's valuation is steadily approaching the historic trillion dollar mark — but an executive hinted this week that there aren't any giant acquisitions on the way. That shuts down a popular unanswered question about Apple that analysts have speculated about for years: Which giant acquisition could it make as it grows?
Apple is the most valuable public company in the world, and its market cap is currently at $922 billion (£660 billion). It is seeing its stock price rise regularly, and so it's on track to be the world's first trillion-dollar company.
That's going to be a huge milestone. Combine it with Apple's immense cash pile, and it sets the company up for splashing the cash on a major acquisition.
Apple has a cash pile of $252 billion (£180 billion), and its CFO Luca Maestri told The Financial Times in December when that figure was lower that "our target over time is to take that $163 billion down to approximately zero."
The company's largest purchase to date was its 2014 acquisition of Beats for $3 billion (£2.1 billion). But since then, analysts have set out reasoning why Apple may wish to splash out and buy various large companies.
A popular idea is that Apple should purchase a media company in order to beef up its original content. Adding Netflix's shows to Apple Music, or Disney films, would make that service far more desirable.
Apple executive Eddy Cue spoke at the South By Southwest conference earlier this week and poured cold water on speculation that Apple could acquire a large company.
Interviewer Dylan Byers asked Cue whether Apple's recent acquisition of digital magazine app Texture set things up for a larger media acquisition.
Cue said that if you look at the "general history of Apple, we never make huge acquisitions."
He went on to quote hockey player Wayne Gretzky and likened Apple's strategy to "skate to where the puck is going, not to where it is."
And that does indeed seem to be Apple's strategy. Instead of spending billions on established businesses, it prefers to make smaller purchases and then to grow the company internally.
Apple bought Siri in 2010, and integrated its technology into the iPhone and eventually many of its hardware products. And its 2015 purchase of Metaio eventually became part of its ARkit software.
Cue's comments at South By Southwest effectively end one of the most popular thought exercises for Apple analysts. They're no longer free to speculate about potential major acquisitions from Apple.
Shutting down that avenue will simply return analysts to the original unanswered question. What will Apple do with all that cash, if not spend it on M&A?
The company could increase its stock dividend or its share buyback pr0gram. While that might be good for AAPL it could also send a negative signal, by suggesting that Apple is out of new product ideas and needs to sustain its stock price through financial engineering.
Or, analysts could take a closer look at Apple's core business: iPhone sales.
The picture there isn't universally pleasant. A series of analysts have downgraded their production forecasts for Apple's latest iPhone, the iPhone X. They cite "sluggish" demand for the phone, which forms the core of Apple's business.
Apple is approaching a "defining moment" for the iPhone, according to UBS Analyst Steven Milunovich, as demand for the product slowed. "The iPhone is now mature," Milunovich wrote in February. "A mature iPhone means that other categories, especially services and other products, will become material to growth."
One new budget line is original content. The company reportedly has a yearly budget of $1 billion (£716 million) to spend on content for Apple Music. With $252 billion to spend, it'll take a long time to burn through that cash even if it quintupled its budget.
And then there is augmented reality. "We think it's going to be huge," Cue said at SXSW. But we still haven't seen a massive new product idea from Apple in that area.
So Cue's statements actually make Apple's choices look tougher. If M&A is off the table, then perhaps Apple has an amazing multibillion-dollar product up its sleeve that we don't yet know about, one that can reignite growth at the company. That's the optimistic solution.
The flipside of that is, Apple doesn't have a new product, it won't spend its cash on a dramatic acquisition, and it will remain dependent on the iPhone, which is entering its third year of minimal-to-non-existent growth. And that is a trillion-dollar headache.