Apple in Talks to Acquire Beats Electronics for $3.2 Billion [Updated]

[Arndroid]

Can Beats service handle a billion of costumers (iPhone+iPad+Mac+PC)?

Does it do anything worthwhile of acquiring?

Then...

Makes lots of money

 

[bozzykid]

I usually hate these posts, but this is likely accurate. Steve was a music junkie , and I'm guessing his headphones of choice were something like Sennheiser, or Grado.

Apple would probably sell off the hardware part of Beats at some point so I doubt it matters.

 

[1984]

The Apple logo is the most beloved and worshiped on earth. Perhaps they won't can the Beats name, who knows?

No, I think you've proven it isn't. There isn't always a logical reason for it. Once an underdog becomes successful people view them negatively. People used to love Google too.

 

[skaertus]

I guarantee you Disney cannot be purchased for $120 billion. I'm not saying Beats is worth 3.2 billion, but they won't sell it for less.

I think Disney cannot be bought for US$ 120 billion. Perhaps for US$ 150 billion. I don't know. It's not an easy task to evaluate companies, and there are several methods to do that. Disney bought Marvel for US$ 400 million, and that was a bargain!

 

[Arndroid]

Sounds over valued to me. Are we living in the shadow of another tech bubble? If Apple buys Beats, it will be to the sound of hop hop (oddly enough, the area where a good set of Beats headphones excel), not canons!

Actually not likely overvalued at all. In fact it is likely a pretty cautious valuation given the general information we have.

 

[sdsvtdriver]

Sure, that's how a deal would go down. The problem I'm having is with the initial premise - that Apple can't quickly build a great streaming service.

They already stream audio via iTunes Radio and iTunes Match, and a decision to build a full-on, Spotify-style streaming service would have been taken a while ago. What could possibly be so hard that a company the size of Apple couldn't glue the pieces together?

Favorable licensing agreements with labels. Iovine.

 

[TechZeke]

You can get the same performance for less money in some cases with other brands.

Well just looking at performance, it's still a mixed bag. Ironically, the iMacs have the best GPUs of any All-on-Ones by 10,000 light years. Sure, I get a something specs of a rMBP for $1000 in an HP, but the laptop itself is complete crap. Dell's new XPS 15 cost just as much as a rMBP and still doesn't come with PCIe based SSDs.

Aunt's HP laptop. Has the Haswell i7, 8GB of RAM, etc. The trackpad is so horrible it's useless, and the keyboard flexes by at least a few millimeters when pressing the middle keys. POS.

Apple has the highest profit margins in the industry. They sell expensive products that sell very well. Beats sells somewhat expensive products that sell well. This deal is all about dollars and cents for Apple, people are reading far too much into it, IMO.

Completely agree.

 

[1984]

I usually hate these posts, but this is likely accurate. Steve was a music junkie , and I'm guessing his headphones of choice were something like Sennheiser, or Grado.

Keep in mind he seemed to think the iPod HiFi sounded better than an expensive home system.

 

[bushman4]

What does Beats Electronics have that Apple wants???
Thats the big question

 

[zorinlynx]

Yeah, we got billions to spend on Beats to bring in those tweens that still don't have an Apple product, but we ain't got no time nor no money to spend on licensing Rosetta for the diehard Apple users who think Snow Leopard was Apple's shining moment and it's been a downhill slide since then (Lion! Mountain Lion! Mavericks! Safari tabs! QuickTime's codecs! we can't afford to hire software testers, so we ask our user base to be beta testers -- for free!).

Okay, back to converting all my AVI-.mov QuickTime movies into .mp4 (thanks a lot for that surprise, Apple!).

Ya know, when Apple switched to Intel, I immediately started working to replace my PowerPC applications with native Intel ones, because PowerPC emulation is slow, and because I KNEW THAT IT WOULDN'T BE SUPPORTED FOREVER.

People had YEARS to find alternatives to PowerPC applications. I was 100% Intel native within a year. It's not that hard.

 

[haruhiko]

Steve Jobs: Tim Cook has no taste

 

[bozzykid]

What does Beats Electronics have that Apple wants???
Thats the big question

Streaming deals with every major music label and a development team they could probably use. I'm guessing Apple is not satisfied with how well iTunes Radio is performing.

 

[AppleScruff1]

No, I think you've proven it isn't. There isn't always a logical reason for it. Once an underdog becomes successful people view them negatively. People used to love Google too.

Apple has the largest following of any company in existence. People call every phone an iPhone, even when it's another brand. Much like Kleenex, Xerox, etc. Brand recognition is strong. Apple is the Big Brother of the mobile world and people still love them. I say this sincerely, they could just change the name on the current iPhone and nothing else and people would still buy it in droves. People are still buying the 4S, which is soon to be 3 generations old. The Android and Windows world offers far more advanced phones for that price point, but people want an iPhone. People bought a 3 generation old iPad for $100 less than the current model. If that isn't brand recognition, I don't know what it.

 

[Arndroid]

This reminds me of an agent who has a free agent player and wants to drum up business by saying 'team x has a lot of interest and is close to signing the player'. My guess is Beats has some other negotiations going on with another company and want to push it through and are trying to play their hand by saying apple is ready to buy.

I see nothing that beats has that is worth purchasing, let alone spending $3.2B on. I'll be very concerned as a shareholder if this comes to fruition.

You should probably stick to putting your money into CDs and government bonds based on that analysis.

I guess it is not surprising but a bit mortifying that 98% of the people have no idea how a real business valuation works. Money talks and dislike for youth and urban appealing products walk.

I think part of the problem is the dot com boom and bust and the next twelve plus years have confused people into having weird ideas on how companies are valued.

The most tried and true way to value a company is based on earnings. There really is no better metric. I understand why people have been confused into believing that a company like apple only buys companies for parts but that is just because that is what it is. If you have a chance to acquire a business that has multiple components that will work for you and is already highly profitable and dominants its market, it is a win-win.

This may not happen but people saying this is not what apple does do not understand that opportunities to acquire strategic components while also taking on a succesful company are almost non existant as opportunities.

Maybe their primary goal is the streaming, but they would not pay 3.2 billion for the streaming. They get the streaming as part of a deal buying a company that will repay for itself in 10-20 years without any additional leveraging.

This deal makes sense in total, not because of the headphones, not because of the streaming but because of what the entire company offers apple on many fronts.

 

[AppleScruff1]

Well just looking at performance, it's still a mixed bag. Ironically, the iMacs have the best GPUs of any All-on-Ones by 10,000 light years. Sure, I get a something specs of a rMBP for $1000 in an HP, but the laptop itself is complete crap. Dell's new XPS 15 cost just as much as a rMBP and still doesn't come with PCIe based SSDs.

Aunt's HP laptop. Has the Haswell i7, 8GB of RAM, etc. The trackpad is so horrible it's useless, and the keyboard flexes by at least a few millimeters when pressing the middle keys. POS.

I didn't mean in every case, but for example, you can build a desktop with similar or better performance than an iMac for less money. You can buy a better monitor than the Cinema Display. The Macbooks have caught up on performance in the last two years and now are quite similar in price to a quality laptop from HP, Dell etc. Lenovo and Asus make some very nice laptops, IMO as do Dell and HP, but I'm not talking about the $599 models.

I think the other brands have actually upped their quality in the past two years as a reaction to what Apple offers. A win win for consumers.

 

[PatriotInvasion]

Weird that so many people think this is about headphones. This is all about the music industry, the Beats Music service, and most importantly, Jimmy Iovine and Dr Dre's obvious pull among record company execs.

And say what you want about the headphones, but they sell and developed a fashion appeal...regardless of your cup of tea.

 

[AppleScruff1]

Weird that so many people think this is about headphones. This is all about the music industry, the Beats Music service, and most importantly, Jimmy Iovine and Dr Dre's obvious pull among record company execs.

And say what you want about the headphones, but they sell and developed a fashion appeal...regardless of your cup of tea.

It's about the total package, and Beats has a strong following. This is strictly business for Apple, they're not doing this because of emotions.

 

[Gasu E.]

Most people who hate on Bose can't afford them or they here this bandwagon about how bad they are. Now, I'm not saying you are in that boat, just saying. I've owned many Bose, and I must say that for me, the sound quality has been great, but the build quality, not so much. I've had a few PC speakers (not cheap) die on me. I've also had Harman Kardon, and I really like those, but there were a bit too noisy for me on low volume. I've heard great things about Bowers & Wilkins and that will probably be my next set.

Most people who hate on Bose sound are posers. Build quality, and value relative to price--sure, they are not great there. But anyone who claims that Bose speakers sound bad is just repeating something they think they heard. Posers.

 

[BayouTiger]

Chrapsler NEVER made good cars. Even when Iacocca was pandering to the US government in the 80s. Their cars were crap. Bottom of the quality scales.

Fast forward to today. Same story - Chrysler, Dodge, Jeep, and Ram bring up the rear in just about every dependability survey.
Image

Consumer's Reports paints a similar picture, as does True Delta.

Chrapsler should have died in the 80's and definitely in 2008. They have made utter garbage for way too long.

Sorry for the thread crap, but I own M-B as well. Fact is that the Dodge Challenger has had the highest owner satisfaction several times since it's introduction. Sae era other Chrysler products also place high.

I'm betting you've never owned one and have absolutely 0 first hand experience.

 

[Arndroid]

But there are other companies with much better headphones.
Fannie Wang makes a better headphone.
Bose makes a better headphone
Bang & Olufsen makes a better headphone

The only place where Beats makes a good sounding headphone is the Executive series.

The IP on headphones isn't worth 3.2 billion.
Sorry, it just isn't.
It's speaker technology is a tiny package and for active noise cancellation it's DSP. You can get what Beats has in IP for a lot less.

It would be a mistake for Apple to buy them.
HTC just unwound themselves from Beats last year.

http://www.mobileburn.com/22056/news/htc-and-beats-audio-finalize-their-divorce
http://pocketnow.com/2013/09/27/htc-and-beats-divorce

Beats had a valuation of $1.2 Billion in Sept. 2013 when they bought the 25% of themselves back from HTC for $265 million.

No way is Beats worth 3 times that in eight months.
Stupid, stupid, stupid.........

Beats owns 59% of the high end headphone market. Do you think apple buying them and potentially improving the quality will cause them to lose marketshare? It doesn't matter that some other small companies make better headphones.

 

[alfonsog]

I think Disney cannot be bought for US$ 120 billion. Perhaps for US$ 150 billion. I don't know. It's not an easy task to evaluate companies, and there are several methods to do that. Disney bought Marvel for US$ 400 million, and that was a bargain!

Disney bought Marvel for $4.64 billion... and lucasfilm for $4.06 billion.. Disney's assets are over $80 billion...

 

[kamalds]

I guess that means Samsung is going to be releasing new headphones next week

LOL. Your comment surely made me laugh. What a way to start off my day!

 

[TechZeke]

I didn't mean in every case, but for example, you can build a desktop with similar or better performance than an iMac for less money. You can buy a better monitor than the Cinema Display. The Macbooks have caught up on performance in the last two years and now are quite similar in price to a quality laptop from HP, Dell etc. Lenovo and Asus make some very nice laptops, IMO as do Dell and HP, but I'm not talking about the $599 models.

I think the other brands have actually upped their quality in the past two years as a reaction to what Apple offers. A win win for consumers.

I think Sony VAIOs are pretty good. Also, stop comparing a PC tower desktop to an AIO. Of course you can build a desktop for less money. You need to compare AIOs to AIOs, and in this aspect, iMacs clearly win. Look at something like a Dell XPS 27 AIO.

I can agree on ASUS, as I think I would get a Zenbook Prime over a MBA. However, the best models cost just as much as a MBA. That argument is out. Also, they may make a good laptop, but the laptop weighs 5 Ibs and is 1.5" thick. Again, you really need to compare like products.

 

[Fanaticalism]

Bose is a billion times better than Beats

Actually, it's not. Bose recycles drivers and stuffs them into every single product. Marketing first and foremost.

Beats, marketing first and foremost.

Bose- stuffy midrange and nothing else

Beats- muddy bass and nothing else.

Look up their frequency response, harmonic distortion etc... not pretty.

You want good sound from headphones? Sennheiser, AKG, Grado...

 

[Zerilos]

Steve Jobs: Tim Cook has no taste

Do you think Cook would be CEO without the support of Jobs? Seriously doubt it.

----------

I usually hate these posts, but this is likely accurate. Steve was a music junkie , and I'm guessing his headphones of choice were something like Sennheiser, or Grado.

Personally I think comments "describing" what Jobs would have thought are almost always rubbish.