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Apple needs its next big thing—fast.

With its shares down nearly a third in the past three months and the financial guidance bombshell earlier this year, the burning question turns to what Apple (ticker: AAPL) can do to spark a turnaround.

On Jan. 2, the smartphone maker lowered its December-quarter revenue guidance 8% below the Wall Street consensus. The announcement confirmed the market’s worst fears that a negative growth year for the iPhone was ahead.

Since then, however, Apple has hinted that it will act boldly to revive its fortunes. CEO Tim Cook reminded investors in a recent letter that Apple’s goal is to be “net-cash neutral” over time, meaning that Apple needs a use for its $130 billion in net cash. So far, that has meant buybacks and dividends. But in a recent CNBC interview, Cook made it clear that the company continues to ponder large acquisitions, as well: “We’ve elected so far not to do those because we haven’t found one that we said, ‘Wow, that’s a nice intersection of Apple.’ But I’d never rule it out.”

In a recent episode of The Readback, Alex Eule is joined by Barron’s tech reporter Tae Kim to talk about how Apple lost its way and where it goes from here. You can sign up for the podcast in iTunes or wherever you listen to podcasts.

While flashy candidates like Netflix and Tesla often get mentioned, their elevated valuations and cash burn don’t match Apple’s love for high profit margins and financial conservatism.

The best fit for Apple may be Nintendo (NTDOY), its stylistic twin in Asia. Like Apple, Nintendo likes to make money. Both companies have similar attributes: mountains of cash, gushing profits, beloved brands, loyal customers, and sticky ecosystems of software and services.

Apple declined to comment. Nintendo did not respond to requests for comment.

With Nintendo, Apple would get significant exposure to the large and growing gaming industry, while benefiting from a vast array of potential revenue synergies. Market research firm Newzoo estimates that the global gaming market grew 11%, to $135 billion, last year and projects it could rise to $174 billion by 2021, or about 9% per year. The gaming industry is one of the few remaining verticals that could actually move the needle for Apple.

Nintendo owns some of the most valuable videogame franchises in the world—including Mario, Zelda, and Donkey Kong—and has a library of thousands of games across more than three decades in the business. While it continues to turn out wildly popular and well-reviewed games, Nintendo has struggled to gain traction beyond its home consoles. Apple has a few things to offer there: Think iPhone, Apple TV, iPad, and maybe even the Mac.

Imagine playing Switch,Super Nintendo, or old NES classics on any Apple TV or iPad with the simple addition of a wireless Bluetooth controller. Conveniently, the latest iOS devices use the same ARM-based processor chip technology found in Nintendo’s Switch, making software conversions much easier.

Apple could help Nintendo aggressively scale its Nintendo Switch Online paid subscription business, which enables robust multiplayer online services and access to a classic games library. All told, Apple’s ecosystem powers 1.4 billion active devices.

The company could also increase Nintendo’s development of smartphone games. Morgan Stanley estimates that more than 70% of App Store spending is tied to game-related apps.

Nintendo content, meanwhile, would help Apple drive engagement, recurring revenue, and customer satisfaction, all while boosting demand for Apple hardware.

Perhaps the best part of the deal? Apple may be able to acquire the highest quality videogame publisher in the world at a reasonable price.

Nintendo has a market value of $34 billion, but Nintendo is conservative with its capital and has approximately $9.6 billion in net cash. That gives the company an enterprise value of about $24 billion. If Apple offered a 50% premium to Nintendo’s market value—a deal that Nintendo would have to consider—the price tag would come to roughly $40 billion.

That’s still cheap. As recently as a year ago, Nintendo had a market value of $55 billion. If a full acquisition can’t be consummated, a large equity stake or strategic partnership could also work for both companies.

Nintendo currently trades at a reasonable 14 times its next fiscal year (March 2020) earnings. Wall Street forecasts that Nintendo will generate almost $13 billion in sales next year.

The Kyoto, Japan–based company’s American depositary receipts have declined nearly 40% from their early 2018 highs amid concerns that Nintendo’s lighter software slate this year will detract from its ability to meet its Switch hardware sales forecast.

Investors are now too pessimistic about Nintendo’s prospects. The market could be surprised by Nintendo’s holiday momentum, boosted by the strength of its Super Smash Bros.Ultimate game release, which will enable the publisher to hit its March fiscal-year target of 20 million Switch units.

Apple can learn from Microsoft (MSFT), the company that surpassed it in market value late last year. The software giant jumped into videogames with the Xbox in 2001, a platform that has morphed into a major online service.

In its latest quarter, Microsoft reported gaming revenue growth of 44%, driven by Xbox software and services. The monthly user base of its Xbox Live online service grew by 8%, to 57 million. Sony’s own paid game subscription-service offering called PS Plus had 34.3 million subscribers as of September.

Take Nintendo’s content and Apple’s scale and the combined company could quickly jump ahead of Microsoft and Sony (6758.Japn) Today, investors value Microsoft at 22 times estimated 2019 earnings, while Apple trades at just over 12 times, thanks to its hardware-centric perception.

The game plan is clear. Your move, Apple.

Write to Tae Kim at tae.kim@barrons.com