How do you figure? Universal Music makes $500 million on their current business model. Apple will add to this with a download service but it certainly won't hinge on it. CD's won't disappear over night.
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Apple To Buy Vivendi's Music Division For $6 Billion
- Thread starter AlejandroGonzo
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How do you figure? Universal Music makes $500 million on their current business model. Apple will add to this with a download service but it certainly won't hinge on it. CD's won't disappear over night.
To reply about the thought that Apple needs to focus on making faster computers, realize this.
Apple can make the fastest computers in the world, but if you couldn't do anything with them, or could do more with another computer, you wouldn't use them. Apple is all about the user experience. If Apple could make the experience of getting new music much easier and enjoyable, the computers would then sell themselves. It's up to IBM (and motorola, kinda) to make the computers faster. Apple is doing a good job at putting in features and making Macs easier to use by the day.
What would also kick @$$ is if an aspiring artist could easily sign on with Universal/Apple (if it happens) and make himself more seen. It would revolutionize music as we know it.
If Apple does buy Universal Music, they would most certainly do something good with it.
Apple can make the fastest computers in the world, but if you couldn't do anything with them, or could do more with another computer, you wouldn't use them. Apple is all about the user experience. If Apple could make the experience of getting new music much easier and enjoyable, the computers would then sell themselves. It's up to IBM (and motorola, kinda) to make the computers faster. Apple is doing a good job at putting in features and making Macs easier to use by the day.
What would also kick @$$ is if an aspiring artist could easily sign on with Universal/Apple (if it happens) and make himself more seen. It would revolutionize music as we know it.
If Apple does buy Universal Music, they would most certainly do something good with it.
I hope this is a good thing eventually because Apple's stock has been in the toliet today. Oh well, My XM Radio stock is doing quite well however.
I didn't understand that to be the previous poster's point. Even so, I just don't know whether $700MM in goodwill is a lot or not. WorldCom had something like $80B, nearly all of which had to be written off because it was a bunch of crap built up over repeated acquisitions with large premiums. (Those premiums are accounted for as goodwill.)
Given that Apple has not engaged in any huge acquisitions lately, it makes sense to me that their goodwill value would be low. (But I freely admit I'm at the edge of my understanding here.)
Also, I'm sure Apple has some debt too, which would have to be added back in to compute goodwill. (Market cap should reflect reflect assets, goodwill, and debt.)
The skinny on Universal's finances
Source: http://www.vivendiuniversal.com/vu2/en/what_we_do/factsheet_music.cfm
For 2002:
Millions of euros
Full year 2002 (unaudited)
_
Revenues
_
6,276 (6,781 US - conversion as of 4/10/03)
Operating Income
_
556 (601 US - conversion as of 4/10/03)
This does indicate a downturn from 2001 in both revenue and profit.
According to that page, Universal is the world's largest music label, with 23.5 % market share.
Currency conversions...OS X's calculator is good for something!
Source: http://www.vivendiuniversal.com/vu2/en/what_we_do/factsheet_music.cfm
For 2002:
Millions of euros
Full year 2002 (unaudited)
_
Revenues
_
6,276 (6,781 US - conversion as of 4/10/03)
Operating Income
_
556 (601 US - conversion as of 4/10/03)
This does indicate a downturn from 2001 in both revenue and profit.
According to that page, Universal is the world's largest music label, with 23.5 % market share.
Currency conversions...OS X's calculator is good for something!
G4Scott, that's the problem though. Apple has, in the past, shown that when they over-diversify what they are trying to do, current products tend to suffer. Remember the 90's? Newton, MacTV, eWorld, all the Performas, all the PowerMacs, the Pippin, the set top box, scanners, printers, digital cameras, etc. Yes, they were all good ideas, and yes they were mostly ahead of their time, but Apple did not profit from all of those things, and how many are still around? I just fear that they will focus too much on one area at a time and allow other areas to languish. We are already in a slump with the processor technology, I just don't want to see things get worse.
That said, I do believe that if Apple did do this, they would probably have a fantastic plan, but the question will be, is whether the public is ready to adopt whatever they have planned. On the other hand, people, (the average Joe) may finally realize the integration of the Mac OS with the iApps, etc., and may cause others to think about Apple when it's time to get a new machine. It's just a HUGE gamble.
Regards,
Gus
That said, I do believe that if Apple did do this, they would probably have a fantastic plan, but the question will be, is whether the public is ready to adopt whatever they have planned. On the other hand, people, (the average Joe) may finally realize the integration of the Mac OS with the iApps, etc., and may cause others to think about Apple when it's time to get a new machine. It's just a HUGE gamble.
Regards,
Gus
Definitely, interest rates couldn't be any lower and if so who cares they're still pretty freakin low.
Another side note:
OK - Apple's stock price is dropping because of several variances - I must concede that with no other brimming news from them (save some new iPods), this music service deal could just be dropping the stock price... this isn't a bad thing. Investors move money, they do it on all kinds of news... Apple could have announced they are buying ANYTHING and the stock would drop.
It's exciting I think - huge potential...
And to whoever was saying Motorola needs to speed up the G5 - don't hold your breath. The Reg says IBM is making the next PPC chip - how that will work I dunno, I was always under the impression that Apple built it's OS around the arcitechture of the Mot. Chip??? Seems they would have to redo alot of OS X to work on a chipset - but I'm not an engineer.
If you can put a 6-disk cd changer in a car, why not an iPod dock that is hidden and allows access to playlists and stored music? And since XM is coming along nicely, why can't I take a minute of bandwidth and download new music on the road?
I'm just so SICK of taking CDs from home to the car and back. All my cds are getting scratched. I'm also fed up with poor sound quality in MP3 files... I saw someone say MP3s sound as good as cds. Wrong answer.
My music should be my music - shouldn't matter if I'm at the gym, in the car, or on the couch at home. No need to burn copies of anything if I've always got it with me. In fact, I bet with careful planning and pricing - you could *almost* wipeout illegal copying.
Ok, maybe not. Either way - I hate cds and will pay for digital music if they offer it and the quality is there. I got a couple songs from mp3.com that were poorly decoded - bass distortion, etc... what BS.
Not only that - I'll buy a new iPod that handles these services should I need to - but again, the quality has to be there... if you're going to charge me a buck a song, or even $.50/song - it had better give me the sound my old scratched cd's give me.
As Tommy Lee Jones says in 'Men In Black' - "These are going to replace cds soon, look like I'll have to buy the White Album again..."
OK - Apple's stock price is dropping because of several variances - I must concede that with no other brimming news from them (save some new iPods), this music service deal could just be dropping the stock price... this isn't a bad thing. Investors move money, they do it on all kinds of news... Apple could have announced they are buying ANYTHING and the stock would drop.
It's exciting I think - huge potential...
And to whoever was saying Motorola needs to speed up the G5 - don't hold your breath. The Reg says IBM is making the next PPC chip - how that will work I dunno, I was always under the impression that Apple built it's OS around the arcitechture of the Mot. Chip??? Seems they would have to redo alot of OS X to work on a chipset - but I'm not an engineer.
If you can put a 6-disk cd changer in a car, why not an iPod dock that is hidden and allows access to playlists and stored music? And since XM is coming along nicely, why can't I take a minute of bandwidth and download new music on the road?
I'm just so SICK of taking CDs from home to the car and back. All my cds are getting scratched. I'm also fed up with poor sound quality in MP3 files... I saw someone say MP3s sound as good as cds. Wrong answer.
My music should be my music - shouldn't matter if I'm at the gym, in the car, or on the couch at home. No need to burn copies of anything if I've always got it with me. In fact, I bet with careful planning and pricing - you could *almost* wipeout illegal copying.
Ok, maybe not. Either way - I hate cds and will pay for digital music if they offer it and the quality is there. I got a couple songs from mp3.com that were poorly decoded - bass distortion, etc... what BS.
Not only that - I'll buy a new iPod that handles these services should I need to - but again, the quality has to be there... if you're going to charge me a buck a song, or even $.50/song - it had better give me the sound my old scratched cd's give me.
As Tommy Lee Jones says in 'Men In Black' - "These are going to replace cds soon, look like I'll have to buy the White Album again..."
Apple + Universal Music + Pixar ?
Did I read recently that Pixar was in the process of renegotiating it's partnership deal with Disney? If so, it may be that Jobs and Co. see a merger or at least partnership with Apple + Universal + Pixar as an opportunityt to create the ultimate digital content and distribution company. Jobs has always admired Sony and has wanted to emulate their ability to provide complete solutions in the market. For those wondering where Apple would come up with the extra $2 billion, I wonder how much of Job's stake in Pixar he is willing to leverage . . .
Could be interesting.
And for those who say, with such egregious certitude, that this a terrible idea or a great idea -- how can you even come to such a conclusion without knowing what the deal is and, more importantly, not knowing what music service Apple is providing?
The ultimate convergence would be a deal such as above plus Apple providing a music + Tivo-like digital entertainment appliance AND service. This is something like AOL Warner wished they could've done but they weren't reallly in a position to do much more than cross-marketing. Apple could provide the hardward, the cross-marketing and, most importantly, the easy to use service.
I'm undecided as to the wisdom of any such buyout but it's damn interesting.
Did I read recently that Pixar was in the process of renegotiating it's partnership deal with Disney? If so, it may be that Jobs and Co. see a merger or at least partnership with Apple + Universal + Pixar as an opportunityt to create the ultimate digital content and distribution company. Jobs has always admired Sony and has wanted to emulate their ability to provide complete solutions in the market. For those wondering where Apple would come up with the extra $2 billion, I wonder how much of Job's stake in Pixar he is willing to leverage . . .
Could be interesting.
And for those who say, with such egregious certitude, that this a terrible idea or a great idea -- how can you even come to such a conclusion without knowing what the deal is and, more importantly, not knowing what music service Apple is providing?
The ultimate convergence would be a deal such as above plus Apple providing a music + Tivo-like digital entertainment appliance AND service. This is something like AOL Warner wished they could've done but they weren't reallly in a position to do much more than cross-marketing. Apple could provide the hardward, the cross-marketing and, most importantly, the easy to use service.
I'm undecided as to the wisdom of any such buyout but it's damn interesting.
Short and Long term View
I'm writting this first post partially because an investor in Apple I want to get it straight for my self and thougth that my take would be interesting to some of you.
Short Term:
The drop in stock price was probably not caused by people who post at Macrumors. Think institutional investers. (4million extra shares traded today is more shares than I have)
In my opinion it was probably caused due to the increased risk this move would add to Apple stock AND more importantly the drop relates to the methods that Apple would use to finance such a venture, such as issuing shares or increasing its debt to equity ratio. Simply, the sum of these parts might be less valuable in the short term than they are appart.
Long Term:
Unknown
The main reason Vivinde is trying to sell this is to get rid of its debt NOT because its a bad buisness. Think of it this way. If you take a loan out to buy an icecream truck you have to make enough money to pay of interest +expenses. This debt is hurting Vivindi too much in the short term.
Apple would be able to finance the deal on much better terms and therefore would not have such a big hit in interest payments. (think buying the icecream truck outright)
Cons: Apple gains risk and lots of potential problems
Pros: Apple gains a valuable asset at a good price
Potenial for Apple to open new markets in digital music services
Conclusion: The shift is very much a shift to a Sony buisness model. I havn't figured out if I am for or against this yet.
I'm writting this first post partially because an investor in Apple I want to get it straight for my self and thougth that my take would be interesting to some of you.
Short Term:
The drop in stock price was probably not caused by people who post at Macrumors. Think institutional investers. (4million extra shares traded today is more shares than I have)
In my opinion it was probably caused due to the increased risk this move would add to Apple stock AND more importantly the drop relates to the methods that Apple would use to finance such a venture, such as issuing shares or increasing its debt to equity ratio. Simply, the sum of these parts might be less valuable in the short term than they are appart.
Long Term:
Unknown
The main reason Vivinde is trying to sell this is to get rid of its debt NOT because its a bad buisness. Think of it this way. If you take a loan out to buy an icecream truck you have to make enough money to pay of interest +expenses. This debt is hurting Vivindi too much in the short term.
Apple would be able to finance the deal on much better terms and therefore would not have such a big hit in interest payments. (think buying the icecream truck outright)
Cons: Apple gains risk and lots of potential problems
Pros: Apple gains a valuable asset at a good price
Potenial for Apple to open new markets in digital music services
Conclusion: The shift is very much a shift to a Sony buisness model. I havn't figured out if I am for or against this yet.
Re: Short and Long term View
I think Sony is a decent comparison. Unfortunately, Sony's entertainment division hasn't been all that hot. If it wasn't for Spider-man last year, they would've tanked I think. I've read quite a few articles about the conflict between the management at the US side (particularly entertainment mgmt) with the Japanese electronics management. But Sony is squarely in the business of home electronics and products that enable entertainment (professional production gear as well as the stuff you use at home to consume the media). I see Apple as sitting on the sidelines hoping to get in the game. I don't know if they will have the same synergy (if there even is any).
Re: Short and Long term View
As a co-apple-investor.. I feel very similarly to albinogoldfish, this could be an amazing thing, but.. is the depletion of Apple's reserves and the major intial financial hit worth it ? This of course, doesnt even touch on subjects like, Apple losing focus, Apple becoming pro DRM, etc..
As a co-apple-investor.. I feel very similarly to albinogoldfish, this could be an amazing thing, but.. is the depletion of Apple's reserves and the major intial financial hit worth it ? This of course, doesnt even touch on subjects like, Apple losing focus, Apple becoming pro DRM, etc..
Why do you think this? I'm imagining all the horrible things that will happen with the huge conflict in cultures that will make trying to merge even upper management a huge struggle. I just dont' see anything that qualifies Apple as a potential success in the music industry (unless you count creative marketing of computers as an asset in the music biz).
haven't read everyone's comments, but, this sounds like a bad idea to me.
Sony is sorta schizo because of their hardware side competing against their entertainment side. with the need to make money on both sides of the biz, there is some friction. by that i mean that the entertainment side is gungho about DRM. the hardware side seemingly isn't (this according to a couple of articles I've read in the past year). Apple is schizo enough as is. they are making hardware and software, some even for competing platforms (winders).
And The Big A does't seem to be increasing their coffers from year to year. Heck. alot of those quarters they had a while ago, during the Bubble, were the result of investment revenue. Don't you all recall how they had a huge stake in ARM Holdings and slowly sold off shares and added that to the bottom line?
Additionally, since Apple is trying to innovate their way out of the recession that means they are spending more and expecting to take losses. Why roll out jack for a huge purchase when the core biz isn't supporting it self as the company, and us people, would like it to? Misplaced priority. Totally misplaced. I'd rather think Apple buying specialty products developers, like those companies that make iPod accessories, or picking up assets from companies like SonicBlue (bankrupt) would broaden their reach in the established market and allow the company to expand their markets into general consumer goods. There isn't anything wrong with that and it would increase their stock value for sure. Why? it would *increase* their revenues within their marketspace. They have stores now and a dealer network(that if they don't irk off) is set up to push product.
This rumored deal would increase value, too. But, come on. The whole widget is missing some desirable pieces and Apple owned recording artists aren't really apart of the widget.
plus, that Apple Records lawsuit...Paul is Dead , not Apple Records. They revised the terms a while back(google it). But, unless, this deal gets Paul's blessing (i.e., investments from the Cute Beatle) it seems even less likely to happen. If it does, expect MS to buy Warner Music. Which sounds even less inviting thinking that computer oriented companies own that much non-computer oriented intellectual property. nauseating, really.
hope this rumor is at best only partly true.
Sony is sorta schizo because of their hardware side competing against their entertainment side. with the need to make money on both sides of the biz, there is some friction. by that i mean that the entertainment side is gungho about DRM. the hardware side seemingly isn't (this according to a couple of articles I've read in the past year). Apple is schizo enough as is. they are making hardware and software, some even for competing platforms (winders).
And The Big A does't seem to be increasing their coffers from year to year. Heck. alot of those quarters they had a while ago, during the Bubble, were the result of investment revenue. Don't you all recall how they had a huge stake in ARM Holdings and slowly sold off shares and added that to the bottom line?
Additionally, since Apple is trying to innovate their way out of the recession that means they are spending more and expecting to take losses. Why roll out jack for a huge purchase when the core biz isn't supporting it self as the company, and us people, would like it to? Misplaced priority. Totally misplaced. I'd rather think Apple buying specialty products developers, like those companies that make iPod accessories, or picking up assets from companies like SonicBlue (bankrupt) would broaden their reach in the established market and allow the company to expand their markets into general consumer goods. There isn't anything wrong with that and it would increase their stock value for sure. Why? it would *increase* their revenues within their marketspace. They have stores now and a dealer network(that if they don't irk off) is set up to push product.
This rumored deal would increase value, too. But, come on. The whole widget is missing some desirable pieces and Apple owned recording artists aren't really apart of the widget.
plus, that Apple Records lawsuit...Paul is Dead
, not Apple Records. They revised the terms a while back(google it). But, unless, this deal gets Paul's blessing (i.e., investments from the Cute Beatle) it seems even less likely to happen. If it does, expect MS to buy Warner Music. Which sounds even less inviting thinking that computer oriented companies own that much non-computer oriented intellectual property. nauseating, really. hope this rumor is at best only partly true.
These machines existed in the US, more or less. I have a casette I had made at Tower Records in NYC in the summer of 1990. They had a catalogue of available songs, I selected which ones I wanted (like a jukebox) and it recorded them off of a CD onto an audio casette. It then printed and affixed a customized lable and case. Very neat. I don't remember the cost, but I'm sure it was like $8 plus $1 a song or something.
I still have it, and it must be the weirdest collection of songs ever put on a tape:
They Might Be Giants - Ana Ng
TMBG - Don't Let's Start
10,000 Maniacs - Can't Ignore the Train
'Til Tuesday - Voices Carry
Erasure - Chains of Love
Jetro Tull - Aqualung
Short and Long term View
I'm writting this first post partially because an investor in Apple I want to get it straight for my self and thougth that my take would be interesting to some of you.
Short Term:
The drop in stock price was probably not caused by people who post at Macrumors. Think institutional investers. (4million extra shares traded today is more shares than I have)
In my opinion it was probably caused due to the increased risk this move would add to Apple stock AND more importantly the drop relates to the methods that Apple would use to finance such a venture, such as issuing shares or increasing its debt to equity ratio. Simply, the sum of these parts might be less valuable in the short term than they are appart.
Long Term:
Unknown
The main reason Vivinde is trying to sell this is to get rid of its debt NOT because its a bad buisness. Think of it this way. If you take a loan out to buy an icecream truck you have to make enough money to pay of interest +expenses. This debt is hurting Vivindi too much in the short term.
Apple would be able to finance the deal on much better terms and therefore would not have such a big hit in interest payments. (think buying the icecream truck outright)
Cons: Apple gains risk and lots of potential problems
Pros: Apple gains a valuable asset at a good price
Potenial for Apple to open new markets in digital music services
Conclusion: The shift is very much a shift to a Sony buisness model. I havn't figured out if I am for or against this yet.
I'm writting this first post partially because an investor in Apple I want to get it straight for my self and thougth that my take would be interesting to some of you.
Short Term:
The drop in stock price was probably not caused by people who post at Macrumors. Think institutional investers. (4million extra shares traded today is more shares than I have)
In my opinion it was probably caused due to the increased risk this move would add to Apple stock AND more importantly the drop relates to the methods that Apple would use to finance such a venture, such as issuing shares or increasing its debt to equity ratio. Simply, the sum of these parts might be less valuable in the short term than they are appart.
Long Term:
Unknown
The main reason Vivinde is trying to sell this is to get rid of its debt NOT because its a bad buisness. Think of it this way. If you take a loan out to buy an icecream truck you have to make enough money to pay of interest +expenses. This debt is hurting Vivindi too much in the short term.
Apple would be able to finance the deal on much better terms and therefore would not have such a big hit in interest payments. (think buying the icecream truck outright)
Cons: Apple gains risk and lots of potential problems
Pros: Apple gains a valuable asset at a good price
Potenial for Apple to open new markets in digital music services
Conclusion: The shift is very much a shift to a Sony buisness model. I havn't figured out if I am for or against this yet.
