Apple Announces $3 Billion Beats Acquisition, Jimmy Iovine and Dr. Dre Joining the Company

[69Mustang]

Oh my god, calm down dude. So they bought a company that will help their declining iTunes sales and breath a little life into their tired music business. The Mac is still the Mac. The iPad is still the iPad. The iPhone is still the iPhone. OS X is OS X. iOS is iOS. Aluminium is still silver. Jony Ive is still British. Relax. Apple will be fine and so will you.

100% agree.

Bu... bu... bu... but this is SOOOOOOOOOOO un-Apple-like.
-said by someone who apparently never walked into an Apple store and saw the Beats products all over the place.

Bu... bu... bu... but urban, hip hop, and that community
-said by someone who doesn't want to own their prejudices. Stop being PC. We already know what you mean.

These people make me laugh. Apple knows business, period. They wouldn't spend 3 billion wantonly. To quote a famous rap line - see what I did there: "If it don't make dollars, it don't make sense". That's always been Apple and this deal in no way makes me think differently - see what else I did there.

Apple, Dre, and Jimmy are all going to be just fine.

 

[Squeak825]

Prior to this deal is estimated net worth was already $550m

http://www.forbes.com/sites/zackomalleygreenburg/2014/04/18/dr-dres-net-worth-550-million-in-2014/

That includes what Beats was worth before the acquisition. He is not going to get another $750M on top of that.

That article lists Beats valued at $2B, so that $550M for Dre already includes ~$500M for Beats.

This sale at a value of $3B for Beats would put his net worth at around $800M (before taxes are taken out of the $750M of his share of Beats).

 

[HenryDJP]

This does not please me. Another Browett situation? Dr. Dre is not professional. Just look at that silky drunken video of him. Yikes.

What's considered "Professional" is in the eye of the consumer.

 

[MH01]

It really is a smart move for Apple, two companies that have high prices and very hyped devices.

Though one is quality and the other is crap.

Smart move by Beats, not so smart move by apple

 

[Arndroid]

This has NOTHING to do with their equipment. Why do people keep thinking Apple wants BEATS for their gear?

This was about Iovine and BEATS/DRE was part of the package deal.

Because some of us know a lot more about business than you and that you think they paid 3 billion for Iovine is absurd.

They could have gotten him for much less than that. The reality is Beats makes money. So much money that paying 3 billion dollars for beats without Iovine is a really good deal. The fact that they bring Iovine and Dre on board as well as the streaming service turns a great financial deal into an amazing total package. Claiming they spent three billion for Iovine, though, is silly and you should stop saying it. Iovine could have kept his ownership of beats and made 9 figures a year and gotten a job at apple that would have also paid him a good sum of money.

 

[bighype]

Sickening. Apple's really lost the plot under Cook's "leadership".

 

[afsnyder]

I think Apple can do more with Beats than Google did with Motorola. And for a lot less money..

 

[Arndroid]

lol between a company that just built a prototype self driving car vs a company that bought a headphone company for 3 billion. It's really not a hard decision.

Between the company that created the mobile computing world versus the one who spent three billion dollars on a thermostat.

 

[D.T.]

First, that’s a great pic.

Seems like a better purchase than Nest for the same price.

Yeah, I have no idea about the details of their financials, but NEST was doing $300M/year, and Beats $1.5B/year. Seems like with the projected growth, Beats kind of “pays for itself” in pretty short order.

 

[afsnyder]

Sickening. Apple's really lost the plot under Cook's "leadership".

How is it sickening? Beats is a well known brand who's executives are well versed in Music culture. And they've created a great music streaming service.

Iovine helped Apple with the iTunes in the past and has secured many deals for Beats.

Hopefully this doesn't end as badly as Motorola and Google.

 

[coolfactor]

From crap earbuds to crap headphones.

No, that's the low bitrate MP3s that you've downloaded illegally.

 

[HenryDJP]

As much as some people here are upset at this Apple/Beats synergy I'll bet in 5 years these same people will be eating crow while this grows into an amazing business for Apple.

Once again, I hate the Beats headphones and anything made by Monster Beats but from a business standpoint I'll bet Apple will make a killing on this.

 

[TrentS]

This coming from your extensive business education?

Yes, Musk has batteries all over the place, and the Gigafactory is a very exciting prospect. So Apple buys the Gigafactory to make batteries. That’d be cool. Apple buys that solar energy company Musk has a controlling interest in. I can see that making sense.

But you can’t upsell someone from a phone to a car. Completely different purchasing mindset there. Apple has been talking to Musk, but they won’t be buying Tesla. They might buy something else from him, but not a car company.

And did you seriously just suggest they buy SpaceX? Are we even talking about the same Apple here? Selling space travel will become profitable on the same level as the iphone when we start mining in the moons of Jupiter. I’ll be looking for Apple to start building rockets about that same time. Assuming I’m still alive.

I didn't suggest upselling somebody a Tesla over an iPhone. But they are the same target group. Someone that buys a Tesla might be a person that bought an iPhone over a cheap Android phone.

And I didn't say they would buy SpaceX. By purchasing Tesla, you are aligning your company with entities that attain government grants. And if Apple can build a solid iPhone and other gadgets that are well made, they would be a perfect fit for designing and manufacturing parts that help a rocket blast into outter space. At this point, its all about the billions and billions of dollars the USA and other countries out there fork over for space exploration. Musk and SpaceX was awarded 1.6 billion back in 2008, and who knows, his next goverment grant might be over 10 billion. Think BIG, people, stop thinking about streaming music, which is OK, but heck, everyone is doing that.

 

[jennyp]

Insane move by Apple. Tim's lost it.

 

[imanidiot]

The slow but steady decline of Apple as a brand, which began with the loss of Steve Jobs, and has gained momenteum since, now reaches warp speed. With all due respect, **** Tim Cook and the current brain trust. I think I will look elsewhere from here on. The manqué is bankrupt. The sense of specialness is gone. The hell with all this.

 

[scaredpoet]

Next time I'll refrain from unequivocally stating that I know exactly what someone would do, rather than speculating from a third party's perspective on observed behavior.

Please see that you do.

These media content deals were ones of necessity.

And these were the people to make it happen. Apple was negotiation with other execs, and the deals weren't gelling because they didn't see eye to eye. The strategy became, sign deals with like-minded business partners and force the other content providers to fall into line.

 

[xxgilxx]

Way to jump the shark Apple...

 

[smalltimewine]

Shocking.

(Not really to sensible people).

Very solid acquisition that pays for itself while providing apple potential huge upside benefits. Not to mention the synergy between one of the largest headphone makers and one of the largest headphone jack makers.

Financially the deal is a no brainer. Despite what some think, the headphone business makes good sense in relation to apple products. Getting the streaming service as well as iovine and Dre, well they were essentially free as the headphone business alone pretty much makes the price tag a great deal.

I have mentioned it before but the opportunity to buy highly succesful companies who make lots of money and also offer other significant opportunities are almost non existent. Apple hasn't made a deal like this because no deal this good existed. Some will ignorantly say apple should have paid way more to buy spotify, which loses money. That would have been a horrible idea and even a worse business move. Apple can reinvest the money beats earns into growing the streaming service and become legitimate competitors for a fraction of the price and infinity times more value.

I know some people's business education is entirely what they have seen happen in the technology sector in the past fifteen years but spending billions of dollars for companies who don't make money is not normal. So while Facebook can pat themselves on the back for flushing nineteen billion dollars down the toilet on whatsapp and google can gladly dance joyously that they spend three billion on a thermostat and faulty smoke detector, or even better lost billions on their Mototola deal, apple will have to console themselves with buying a company that is likely in a ~15 P/E ratio, that throws in two highly succesful music execs and a streaming service.

Finally...someone with some sense. On hardware numbers alone this is plausible. Yet, Apple get's lambasted when others throw around even higher sums betting on someday.

 

[HenryDJP]

Though one is quality and the other is crap.

Well opposites attract.

 

[TrentS]

There were talks in the past, back when Tesla's stock was under $100/share. I don't think they're working together to build a battery factory at all, at least I haven't seen it here. (Can I get a daily mock up of this gigafactory?? lol). And I wish a Tesla only cost $50k! Try nearly doubling that

But I am with you, I would love an Apple owned Tesla car. It is just in my dreams though.

Tesla doesn't make the Tesla Roadster anymore. The price tag on that was around $120,000. The Model S is around $65,000 to $84.000, I believe. But the next electric car ( or SUV ) Tesla will put out is suppose to be more in the $50,000 range. If that actually happens, it's anybodys guess.

 

[chrmjenkins]

Please see that you do.

And to think that I thought my sarcasm too obvious.

 

[jaw04005]

Time will tell. I wonder is Eddy is nervous about his role? Smile seems forced. : )

I don't see "Jimmy" running Siri, iCloud or iTunes anytime soon. Also they're both apparently going to report to Cue, so I doubt he's worried. If anything he's probably relieved as it appears Iovine will take over content licensing.

Cue had a lot on his plate.

 

[macs4nw]

This is the first time I think the cliche is actually true. I don't think this would have happened under Jobs. He would have insisted that their culture is irreproachable and they need not import another company to make a positive culture shift. I wouldn't say I admired that arrogance, but it was always entertaining to see the confident proclamation that they make the best products, no questions asked.

But Steve was also a shrewd business man, who knew opportunities when he saw them, and could occasionally be swayed by other members of the executive team to reverse previous positions, or at least reluctantly go along with them. It's impossible to second-guess what Steve would have done in this case.

Personally, I'm very optimistic about this deal, and there's no doubt in my mind that Tim and the team thoroughly considered it, before proceeding.

 

[AdonisSMU]

Well opposites attract.

Their streaming service is like a better Spotify.

 

[nazaar]

Let's hope they improve the quality of Beats headphones. They are very badly made, but cost the earth! It is however a very strong brand, with a huge celebrity following. Beats products seems to appear in every music video these days.

I still wouldn't spend the $ to get a pair. Plus there are many other manufacturers that make better headphones.