Yet.
If Apple pull through this, they will have leapfrogged so far ahead as to be OUT of their original industry.
This move would be as revolutionary as a mouse controlling and arrow on the screen.
I - can't - wait.
In Jobs We Trust...
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Apple To Buy Vivendi's Music Division For $6 Billion
- Thread starter AlejandroGonzo
- Start date
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Yet.
If Apple pull through this, they will have leapfrogged so far ahead as to be OUT of their original industry.
This move would be as revolutionary as a mouse controlling and arrow on the screen.
I - can't - wait.
In Jobs We Trust...
Holy geez there are a lot of posts here. Okay, sorry I didn't have time to read all the posts here, but here goes:
Companies aren't supposed to have $4.5 billion dollars in the bank. They're not. So to all the people saying that even if Apple didn't complete a $4.5 billion + whatever deal, and only gave up half that amount of money, it would still be a great move for Apple. Most major deals don't involve cash. You ever notice that? Apple's lucky in a way, but they haven't been smart with their money either. The majority of companies out there don't have nearly that much money saved up for a rainy day. Its actually a very unorthodox business approach to save actual money. Even an accountant will tell you that a person should never have more than $10,000 or so in the bank. Money should never sit in the bank like that. Invest in something, say stocks, or purchase a home or condominium/flat to rent out, etc. Anything is better than large amounts of money in the bank.
Its the same with companies. If you don't do something with the money you've saved up, then you'll probably lose that money anyway since sales will fall if you don't invest in yourself, so you may as well spend it wisely now. You sink when you're stagnant, so don't stop moving. Many companies give some of their money away through dividends to shareholders so that they're doing something with it instead of nothing. For their money, what they get back are happy investors. That's also why Apple invests to release innovative products -- to not sit still. It would be wise if Apple did something with at least $3 billion out of their $4.5 billion, even if it ends up being a failure. Something good will always come out of deals like this.
Buying Universal Music is a good place to put their money if they're planning to spend it somehow.
Integrating music and iTunes, and hopefully offering samples of music, or complete tracks from new artists could boost online sales of music. I purchase CD's online fairly frequently, and I never do so unless I can hear clips of every single song on an album, or unless I download the album first. Great integration potential this way.
Companies aren't supposed to have $4.5 billion dollars in the bank. They're not. So to all the people saying that even if Apple didn't complete a $4.5 billion + whatever deal, and only gave up half that amount of money, it would still be a great move for Apple. Most major deals don't involve cash. You ever notice that? Apple's lucky in a way, but they haven't been smart with their money either. The majority of companies out there don't have nearly that much money saved up for a rainy day. Its actually a very unorthodox business approach to save actual money. Even an accountant will tell you that a person should never have more than $10,000 or so in the bank. Money should never sit in the bank like that. Invest in something, say stocks, or purchase a home or condominium/flat to rent out, etc. Anything is better than large amounts of money in the bank.
Its the same with companies. If you don't do something with the money you've saved up, then you'll probably lose that money anyway since sales will fall if you don't invest in yourself, so you may as well spend it wisely now. You sink when you're stagnant, so don't stop moving. Many companies give some of their money away through dividends to shareholders so that they're doing something with it instead of nothing. For their money, what they get back are happy investors. That's also why Apple invests to release innovative products -- to not sit still. It would be wise if Apple did something with at least $3 billion out of their $4.5 billion, even if it ends up being a failure. Something good will always come out of deals like this.
Buying Universal Music is a good place to put their money if they're planning to spend it somehow.
Integrating music and iTunes, and hopefully offering samples of music, or complete tracks from new artists could boost online sales of music. I purchase CD's online fairly frequently, and I never do so unless I can hear clips of every single song on an album, or unless I download the album first. Great integration potential this way.
TO ADD: And all that crap about the MIAA talking about a downturn in profits over the past few years can be explained very easily......we have been in what has been a recession since 8-10 months before the 9/11 attacks. It got slightly better, and then the attacks occurred, so it got worse. Then it got a bit better again, but oops....Enron scandal + Anderson scandal. And of course now there's a war. The economy just hasn't been doing as well as it was during the year 2000, when sales were at an all-time high. Nsync sold 2 million albums in one week at the time, and Kazaa was around then as well, as was Audiogalaxy. But 10 months before the 9/11 attacks was when their "music sales slump" began.....exactly when the economy was started slumping for the first time in a decade. They just used it as an excuse to blame Kazaa and Napster, thats all. People still buy CD's.
Apple obviously needs to show some caution in entering a market that is in disarray right now. Profits for music labels will continue to slide in the next 5 years. Unless Apple has some serious innovations in mind (which wouldn't be surprising) it is a useless acquisition. I'd expect to see something revolutionary in the industry if this goes through.
I just don't see it. People are talking like Apple is going to revolutionize the music business with these libertarian ideas of low-cost downloadable music or something. If these really are the keys to a revitalized UMG, why don't they do it themselves? What will Apple bring to the table that is going to make UMG such a hot property?
I just don't see that Apple is going to build any synergy with UMG. If someone thinks that Apple really brings something to UMG, I'd like to hear your argument. And for kicks, try and analyze if this is something that UMG could do on their own, or only with Apple (heck, even "better with Apple" should count).
I just don't see that Apple is going to build any synergy with UMG. If someone thinks that Apple really brings something to UMG, I'd like to hear your argument. And for kicks, try and analyze if this is something that UMG could do on their own, or only with Apple (heck, even "better with Apple" should count).
Companies get in talks like this all the time.. what I find unusual is someone felt it necessary to spill the beans for the paper to print.
The only purpose this would serve is to create havoc, sour the deal if it were even a likelihood, or manipulate the value of the stocks for the benefit of a third party.
So who did it and why was it done?
If they were in talks, the most believeable aspect of it deals with emusic and mp3.com-- the music web distribution sites UMG owns. Earlier rumors were about making ALL of the big five or six come in.
I simply don't think online distribution will work unless all major labels come on board with their entire catalog. If there is a problem with eMusic for example, it is that it is primarily the voice of one of five. The only sense I could make of this deal is, it was part of getting UMG to open their catalog to Apple being the distributor (and the included client base eMusic et al presently have).
Earlier rumors had Sony (didn't they have ties with universal at some point?) as the major label that did not want to play ball. BMG of course has had its own eCommerce holdings, as does TimeWarner and the rest (it was odd when BMGs (RCA) investment in AOL got tangled in the AOLTimeWarner merger) But this online music isn't going to work unless they all come along for the ride.
So if this damaging rumor has some background truth, who spilled the beans, and why? Who gains from it?
The only purpose this would serve is to create havoc, sour the deal if it were even a likelihood, or manipulate the value of the stocks for the benefit of a third party.
So who did it and why was it done?
If they were in talks, the most believeable aspect of it deals with emusic and mp3.com-- the music web distribution sites UMG owns. Earlier rumors were about making ALL of the big five or six come in.
I simply don't think online distribution will work unless all major labels come on board with their entire catalog. If there is a problem with eMusic for example, it is that it is primarily the voice of one of five. The only sense I could make of this deal is, it was part of getting UMG to open their catalog to Apple being the distributor (and the included client base eMusic et al presently have).
Earlier rumors had Sony (didn't they have ties with universal at some point?) as the major label that did not want to play ball. BMG of course has had its own eCommerce holdings, as does TimeWarner and the rest (it was odd when BMGs (RCA) investment in AOL got tangled in the AOLTimeWarner merger) But this online music isn't going to work unless they all come along for the ride.
So if this damaging rumor has some background truth, who spilled the beans, and why? Who gains from it?
"Apple stock drops on Universal Music speculation
By Jim Dalrymple
"Merrill Lynch analyst Michael Hillmeyer wrote in a note to clients. "In fact, there do not appear to be any synergies between a music company and a PC company, even one as innovative as Apple."
This is GOOD news. When an analysts says there is no synergy it means Apple are on the right track. Remember everyone thought there was great synergy between AOL and Time Warner.
By Jim Dalrymple
"Merrill Lynch analyst Michael Hillmeyer wrote in a note to clients. "In fact, there do not appear to be any synergies between a music company and a PC company, even one as innovative as Apple."
This is GOOD news. When an analysts says there is no synergy it means Apple are on the right track. Remember everyone thought there was great synergy between AOL and Time Warner.
Too much debt for Apple to take on
Still seems like a bad deal for Apple. Of course Apple isn't going to pay $4.x billion in cash but would create a deal for cash and debt. BUT WHAT IT WOULD HAVE TO PAY CASH FOR IMMEDIATELY AND ON GOING IS VIVENDI'S DEBT SERVICE . Vivendi owes a lot of money and Apple would be responsible for - indeed, it's likely the only way Apple can "afford" Vivendi - all of that debt. So there are speculative earnings to be made, but real immdiate and on-going costs.
Aside from on-line music not looking all that profitable (esp. if we're talking about a Mac-centric simplified system), the assumption of so much debt has all sorts of ramifications for Apple. One is how it's own securities are rated - too much debt and they are likely to be downgraded and will be less desirable. Once Apple has issued the shares, it doesn't care for the purposes of those shares - it's got what it's going to get and profit and loss are left to you and me, but future attempts to raise capital can be impacted. Another downside to having too much debt is that it affects a company's ability to barrow in a similar way it does you or me. Dell might be able to barrow $20 million at 4.5%, but a company with more debt would be charged a higher interest rate - this makes it harder for company B to compete as its money just costs more. So, Apple wants to launch the 970 PB and needs some up front cash for production - opps - the cash is too expensive, can't barrow or high-cost, non-competitive product ensues.
Another aspect is the need to trim the fat to direct more earnings to retiring the real and on-going debt while the music idea is being worked on. I'd hate to see more layoffs of the people making these great machines or the software folks at apple b/c of the music service deal.
Still seems like a bad deal for Apple. Of course Apple isn't going to pay $4.x billion in cash but would create a deal for cash and debt. BUT WHAT IT WOULD HAVE TO PAY CASH FOR IMMEDIATELY AND ON GOING IS VIVENDI'S DEBT SERVICE . Vivendi owes a lot of money and Apple would be responsible for - indeed, it's likely the only way Apple can "afford" Vivendi - all of that debt. So there are speculative earnings to be made, but real immdiate and on-going costs.
Aside from on-line music not looking all that profitable (esp. if we're talking about a Mac-centric simplified system), the assumption of so much debt has all sorts of ramifications for Apple. One is how it's own securities are rated - too much debt and they are likely to be downgraded and will be less desirable. Once Apple has issued the shares, it doesn't care for the purposes of those shares - it's got what it's going to get and profit and loss are left to you and me, but future attempts to raise capital can be impacted. Another downside to having too much debt is that it affects a company's ability to barrow in a similar way it does you or me. Dell might be able to barrow $20 million at 4.5%, but a company with more debt would be charged a higher interest rate - this makes it harder for company B to compete as its money just costs more. So, Apple wants to launch the 970 PB and needs some up front cash for production - opps - the cash is too expensive, can't barrow or high-cost, non-competitive product ensues.
Another aspect is the need to trim the fat to direct more earnings to retiring the real and on-going debt while the music idea is being worked on. I'd hate to see more layoffs of the people making these great machines or the software folks at apple b/c of the music service deal.
I think they were right - the question is, was that "new media" senergy overvalued? What sort of value could the synergy create? Something can be a great deal at $1 billion dollars and a money losing flop at $20 billion. Back in the AOL TW deal days, no one seemed to think any price was too high.
Ummmmm...is it Universal Music or is it Vivendi that has the debt? Makes a difference, you know...
A thing to remember is that computers is Apple's core business...but that core business is also under intense pressures and changes. The industry, like the music business, is changing and will change even more. Remaining static is not really a viable option.
And finally...core business...iPod? Hmmm...seems to me that Apple has already strayed out of its core business and been successful...or is carving out a new core business. And inventing a new core business [which successful companies have been known to do] involves great risk. [What? You thought Hewlett Packard was always in the computer industry?]
A thing to remember is that computers is Apple's core business...but that core business is also under intense pressures and changes. The industry, like the music business, is changing and will change even more. Remaining static is not really a viable option.
And finally...core business...iPod? Hmmm...seems to me that Apple has already strayed out of its core business and been successful...or is carving out a new core business. And inventing a new core business [which successful companies have been known to do] involves great risk. [What? You thought Hewlett Packard was always in the computer industry?]
Picture the scene:
Apple encouraging all that lovely new young Mac talent to play around with that promised free by-product of the Emagic purchase (iTracks, anyone?).
They would be invited to post their recordings onto their .mac homepage with a promise that all postings will be scanned by UMG A&R bods.
The transformation of music production from a hardware base to software has gathered apace and consequently led to lowering the barriers to professional results in a home environment.
It's certainly a reality on the PC platform with cheap hardware (and much pirated software), but kids still don't have a convenient platform on which to broadcast their talents to the powers that be.
Apple could really re-kindle the enthousiasm and aspirations of the younger generation.
It's all about packaging and integration.
Re: Too much debt for Apple to take on
Vivendi is trying to sell UMG to cover their debts: Vivendi's not UMG's. UMG is not in debt... Besides if there was a lot of debt in the deal, the price would be much lower. What you are saying doesn't make the least bit of sense. Jesus. Oh and by the way music is still a profitable business. Less than it was but nevertheless profitable...
NicoMan
Vivendi is trying to sell UMG to cover their debts: Vivendi's not UMG's. UMG is not in debt... Besides if there was a lot of debt in the deal, the price would be much lower. What you are saying doesn't make the least bit of sense. Jesus. Oh and by the way music is still a profitable business. Less than it was but nevertheless profitable...
NicoMan
Re: Apple Records
True. long story, but Apple Computers had to get permission form Apple Records for any music related products / software, etc. Hence the name of their sound "SoSuMe". But this was settled a while ago, otherwise we'd never of had i-Tunes, i-Pods, etc.
Basically, it was the case, but not anymore.
True. long story, but Apple Computers had to get permission form Apple Records for any music related products / software, etc. Hence the name of their sound "SoSuMe". But this was settled a while ago, otherwise we'd never of had i-Tunes, i-Pods, etc.
Basically, it was the case, but not anymore.
You do the math...
A hundred thousand songs $1 each, hundreds of thousands of people - sounds like major profit to me.
If 200,000 people downloaded just 1 song, that's $200,000.
Sometimes people underestimate the simplicity of it all.
A hundred thousand songs $1 each, hundreds of thousands of people - sounds like major profit to me.
If 200,000 people downloaded just 1 song, that's $200,000.
Sometimes people underestimate the simplicity of it all.
Re: This would be a big mistake
The sad thing is, is that every john doe out there; even the investment companies act as if they just ajourned one of apple's secret board meetings, and know EXACTLY why they are CONSIDERING this option.
So to say they will succeed or fail is just a hot load of BS.
Example: Just say if you found a way to make an entire computer's innards work with the speed of fibre optics, but you needed decent quality serial data technology to make it work so you purchased the largest serial data transfer company (even though for all other purposes they are a thing of the past); your stock prices, and credability would be dragged down to the mud by the clueless of the world (Merril Lynch).
Unless you are privy to the info of what's going on in Apple you shouldn'y make a statement going in one direction or another.
Oh yeah.... now back to Merril Lynch some clueless bozo from there suggested that Apple may be in its twilight unless the switch from Moto to Intel, and that PPC is on its last legs. He never bothered to address IBM's 970.
See how bad we look when you don't have all the pieces of the puzzle?
The sad thing is, is that every john doe out there; even the investment companies act as if they just ajourned one of apple's secret board meetings, and know EXACTLY why they are CONSIDERING this option.
So to say they will succeed or fail is just a hot load of BS.
Example: Just say if you found a way to make an entire computer's innards work with the speed of fibre optics, but you needed decent quality serial data technology to make it work so you purchased the largest serial data transfer company (even though for all other purposes they are a thing of the past); your stock prices, and credability would be dragged down to the mud by the clueless of the world (Merril Lynch).
Unless you are privy to the info of what's going on in Apple you shouldn'y make a statement going in one direction or another.
Oh yeah.... now back to Merril Lynch some clueless bozo from there suggested that Apple may be in its twilight unless the switch from Moto to Intel, and that PPC is on its last legs. He never bothered to address IBM's 970.
See how bad we look when you don't have all the pieces of the puzzle?
milk, not cows
Hi guys,
For all on the pro-buy-Universal side, check out today's NY Time's article, in the Technology section. They report that the talks weren't/aren't serious.
http://nytimes.com/2003/04/12/business/media/12MUSI.html
Problems include getting other record companies to sell through planned Apple's online service, the cost of the purchase, the poor financials of the record business, and Apple's lack of experience with content provision.
In any event, the NY Times reports that all five major players have finally, this week, signed onto the Apple online service.
Some killer quotes:
The talks between Apple and Vivendi covered the concept of buying as much as a third of the music unit, according to people close to the discussions. But the talks appear to have been just exploratory discussions that did not go far.
If there is a rationale for such an investment, it may be that Apple believes that its new online music store is set to stem the damage from piracy and that the music business is poised for a turnaround.
Indeed, the new plan for an online store seems to eliminate Apple's need to have any interest in the music business because it would have access to the music. "Why buy the cow when you already have the milk?" one executive close to Apple's planning said.
Hi guys,
For all on the pro-buy-Universal side, check out today's NY Time's article, in the Technology section. They report that the talks weren't/aren't serious.
http://nytimes.com/2003/04/12/business/media/12MUSI.html
Problems include getting other record companies to sell through planned Apple's online service, the cost of the purchase, the poor financials of the record business, and Apple's lack of experience with content provision.
In any event, the NY Times reports that all five major players have finally, this week, signed onto the Apple online service.
Some killer quotes:
The talks between Apple and Vivendi covered the concept of buying as much as a third of the music unit, according to people close to the discussions. But the talks appear to have been just exploratory discussions that did not go far.
If there is a rationale for such an investment, it may be that Apple believes that its new online music store is set to stem the damage from piracy and that the music business is poised for a turnaround.
Indeed, the new plan for an online store seems to eliminate Apple's need to have any interest in the music business because it would have access to the music. "Why buy the cow when you already have the milk?" one executive close to Apple's planning said.
Personally I don't think the premise of the LAT story is correct: I think the person & company making the play here are Fourtou/Vivendi, not Jobs/Apple. It's a play, and a rather transparent one at that, to get Marvin Davis to bump up his bid for the 65% of Universal he wants -- not to get Jobs to buy UMG outright, which would kill Davis' interest in a deal for the rest of the pig.
Furthermore, Apple's $4.4 billion "cash" reserve exists as its in-house R&D fund and as its hedge against a hostile take-over, and the chance that a majority of Apple's board would agree to spend any meaningful portion of cash or encumber any meaningful portion of its other assets to acquire a content business is virtually nil, in my opinion. Content is not the business Apple is in -- and no one knows that better than Jobs.
The article, quoting unnamed sources, says that Jobs/Apple have already "secured deals with four of the world's five largest music corporations to allow their catalogs to appear on (Apple's forth-coming online music distribution) service, which struck me as considerably more newsworthy, in and of itself, than the rest of the Times story.
Given the above, an acquisition of UMG by Apple would have precisely the same, disastrous effect on the nascent online music distribution channel that the acquisition of Paramount Pictures by Viacom (owner of Blockbuster Video) had on the more mature video rental distribution channel. Surely Apple's entire board, including Jobs, can and have figured this out for themselves.
That we're apparently supposed to believe that Apple would gamble its future just to rescue the music industry's titans from their own stupidity in not having already dropping the price of their music sufficiently to slam the brakes on online piracy is just plain laughable, in my opinion.
My guess is that all Jobs/Apple are really after is a deal for carrying the UMG catalog online that's clad in titanium, so to speak, one that the next owner of UMG, whoever it turns to be, won't be able to wriggle out of anytime soon.
Furthermore, Apple's $4.4 billion "cash" reserve exists as its in-house R&D fund and as its hedge against a hostile take-over, and the chance that a majority of Apple's board would agree to spend any meaningful portion of cash or encumber any meaningful portion of its other assets to acquire a content business is virtually nil, in my opinion. Content is not the business Apple is in -- and no one knows that better than Jobs.
The article, quoting unnamed sources, says that Jobs/Apple have already "secured deals with four of the world's five largest music corporations to allow their catalogs to appear on (Apple's forth-coming online music distribution) service, which struck me as considerably more newsworthy, in and of itself, than the rest of the Times story.
Given the above, an acquisition of UMG by Apple would have precisely the same, disastrous effect on the nascent online music distribution channel that the acquisition of Paramount Pictures by Viacom (owner of Blockbuster Video) had on the more mature video rental distribution channel. Surely Apple's entire board, including Jobs, can and have figured this out for themselves.
That we're apparently supposed to believe that Apple would gamble its future just to rescue the music industry's titans from their own stupidity in not having already dropping the price of their music sufficiently to slam the brakes on online piracy is just plain laughable, in my opinion.
My guess is that all Jobs/Apple are really after is a deal for carrying the UMG catalog online that's clad in titanium, so to speak, one that the next owner of UMG, whoever it turns to be, won't be able to wriggle out of anytime soon.
500 million a year in Profit. More than plenty to pay the aquisition price, and the use of the assets.
much better model than Apple itself, which basically just breaks even each year.
it also indicates a huge level of confidence in the future of the new technology (ie IBM970) that they can bet the company on a new direction.
and Steve is not operating in a vacuum, he has to have the backing of his board, and the shareholders (institutional investors)
much better model than Apple itself, which basically just breaks even each year.
it also indicates a huge level of confidence in the future of the new technology (ie IBM970) that they can bet the company on a new direction.
and Steve is not operating in a vacuum, he has to have the backing of his board, and the shareholders (institutional investors)
Sagan
That's a popular theory, but Sagan called foul over likeness.
Sagan wrote a letter to MacWeek (the first to publish the PowerMac code names) stating that he had not authorized Apple to use his likeness to "capitalize" on his reputation. The letter was published January 10, 1994.
This all led to the BHA (Butt-Headed-Astronomer) code name and Sagan suing Apple. Apple won, for those who didn't know.
Pixar
Steve is a business man for Pixar, this is true. He doesn't spend much time at the Pixar building, however. He tried repeatedly to place himself in various positions within the company, failing every time. The Pixar team is run almost entirely independently of Steve.
Sosumi
This keeps coming up. Someone credited Steve for the name, Sosumi. This is blatantly wrong. The name was delivered by Jim Reekes in 1989. Steve didn't work at Apple in 1989.
Facts drawn from "Apple Confidential," by Owen W. Linzmayer and "The Second Coming of Steve Jobs," by Alan Deutschman.
Dan
You might be able to do a better job of streamlining my computer than me, but if you don't own it and I don't try.... You see where this is going. UMG may be able to do a better job, but it's about whether or not they will take the risk. Apple is famous for risk-taking.
Dan
Sagan, an internal code name for a project.
the guy brought far more attention to it than if he had just left it alone. Never would have got the widespread attention otherwise. Witness the fact that we are discussing it here, long after the demise of the product, and its namesake.
Butt-Headed Astronomer, indeed.
the guy brought far more attention to it than if he had just left it alone. Never would have got the widespread attention otherwise. Witness the fact that we are discussing it here, long after the demise of the product, and its namesake.
Butt-Headed Astronomer, indeed.
Sosumi
Sosumi = So Sue Me
From what I heard it was the idea of the music programmer Jim Reekes for that specific warning sound. It was not related to the PowerMac 7100, though, but to the law suit Apple Records VS Apple Computer.
Sosumi = So Sue Me
From what I heard it was the idea of the music programmer Jim Reekes for that specific warning sound. It was not related to the PowerMac 7100, though, but to the law suit Apple Records VS Apple Computer.
so why the hell am I going to pay for something I can get for free again? There's is no innovation in this you just dl your music and play it somewhere whether that means an MP3 player or burning them to a disk. I doubt anyone much cares otherwise.