Apple's Acquisition of Beats Could Be Delayed Because of Valuation, Roles, and More

[Nuvi]

I truly hope this deal never happens. IMHO, if you want to hire somone as senior consultant then hire him as such but don't give him "3 billion bonus" for something that has questionable valuation.

 

[ace5112]

Loose lips sink ships, in this case a 3.2 billion dollar ship.

 

[rmatthewware]

I didn't think that video Dre made would help the negotiations. It came off very smug and I'm sure Tim Cook didn't like it one bit.

It doesn't fit the Apple ecosystem. You don't run your mouth about being rich. This is a really tricky situation for Apple. I think their feeling is that they need an industry insider to keep up with competition. However, $3.2 billion is a steep price to get a couple guys in the form of Iovine and Dre, who they will still have to pay a salary. I think they can get what they need somewhere else and with people who will fit the ecosystem. The hiring of Dr Dre and Angela Ahrendts makes me think of the Sesame Street "One of these things is not like the other" skits.

 

[Soulweaponry]

I always had this image in my head of dre being this uber professional business man that gets **** done. Then I saw the video of him bragging about being hip hops first billionaire like he's some homie in a rap video and I just lost it. Totally changed my mind about him. Very unprofessional. Makes me think he couldn't handle the position

 

[jonnyb098]

Is it any surprise that in a the video was even made and posted??? Most of that musical culture is bragging about money, sex, blah blah. Seems perfectly suited for that lifestyle to flip out and go crazy about how rich he was about to be. Not saying I agree with it. But not surprising.

 

[sualpine]

I always had this image in my head of dre being this uber professional business man that gets **** done. Then I saw the video of him bragging about being hip hops first billionaire like he's some homie in a rap video and I just lost it. Totally changed my mind about him. Very unprofessional. Makes me think he couldn't handle the position

There's a reason he's not CEO, CFO, or a VP of Beats. Just listed as "cofounder".

 

[bobenhaus]

[url=http://cdn.macrumors.com/im/macrumorsthreadlogodarkd.png]Image[/url]


Last week, reports indicated that Apple's acquisition of Beats would not be finalized until this week. With the week ending and no deal having been announced, a new Billboard report offers insight into what could be holding up the deal.

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Billboard's sources indicate the deal "is complicated", as it would be Apple's largest acquisition. In addition, the news apparently leaked "too early", with Apple nowhere near ready for news to break despite publications like Re/code and The Financial Times reporting that the deal is close to completion.

A video that was uploaded to YouTube of actor/musician Tyrese alongside Beats co-founder Dr. Dre is another possible reason for the delay, with Dre claiming that he was the first billionaire in hip hop after the deal. The video apparently "freaked Apple out" and had the Cupertino company outraged.
Fourth, Apple allegedly isn't sure whether to give Beats co-founders Jimmy Iovine and Dr. Dre roles as permanent consultants or whether to give them full-time executive roles. Apple is also apparently unsure whether the two of them would fit into the company's corporate climate, despite reports that Iovine and Dre are the "big prizes" of the acquisition.

Finally, another rumored sticking point is Apple's valuation of Beats Music, which has around 200,000 subscribers and has been speculated as one of the main reasons behind the acquisition. Apple is apparently planning to keep Beats Music separate entity from iTunes in order to avoid cannibalization of iTunes music sales.

Apple pundit John Gruber of Daring Fireball offered another scenario, discrediting the Billboard report and speculating that Beats may have leaked to the deal, angering Apple and scuttling the acquisition before it could be completed.

Article Link: Apple's Acquisition of Beats Could Be Delayed Because of Valuation, Roles, and More

I wouldn't give those guys a penny after seeing that Youtube video. I would be ashamed of myself if I was acting that way and felt proud of it. Ignorance is not bliss in this case.

 

[ThisIsNotMe]

Love these types of comments. Tim Cook only worked his way up to perhaps the most powerful CEO on earth and this guy ^ has all the answers. Armchair quarterbacks never throw incompletions on the playing field of their crusty living room.

Guess you missed the memo.
Apple lost that title this week to Google.
Just do a search. Covered at every major media outlet other than this one.

 

[nuckinfutz]

1. Billboard magazine has absolutely no credibility. Some of you younger people probably don't even know who they are.

2. The video has nothing to do with anything. People are jumping on the drama because it creates page hits. Neither Tyrese nor Dr. Dre mentioned Apple. People watched the video and inferred that it was Apple that was being talked about. All we saw really were drunk people using foul language, dancing and talking about being a Billionaire.

3. Spotify? Seriously folks a Spotify acquisition would cost over 5 billion dollars to close seeing as how they are valued at roughly 4 billion now. Acquiring Spotify wouldn't improve the Apple and Iovine relationship.

4. 3.2 Billion is such a small amount of of money as compared to Apple's War Chest there is no way this is every going to be a bad deal no matter how much kvetching the Grado or Sennheiser fans do.

 

[macduke]

Beats is a big bag of hurt.

If they want to buy a company that knows how to do streaming music and cares about design, they should try buying Rdio.

I really like my Rdio subscription. For some reason I've never been the type to purchase music outright—probably because I like a wide variety of music and it would be prohibitively expensive. When I was a kid I listened to the radio and bought some CDs. As a teen I listened to a lot of streaming internet radio and my friends would make me burned discs. During college it was mostly Pandora or occasionally Last.FM, along with some random iPhone streaming apps. I had a few albums and songs from iTunes, but most of my collection was CD rips. In the last couple of years I've started paying for streaming, bouncing between Spotify and Rdio. I tried Rdio first but their music selection wasn't as good as Spotify. I built up some great stations on Spotify but their design was grating on me and I had lots of problems with my radio streams freaking out on me with all sorts of buggy behavior—like looping the last several songs I listened to again for no reason and then crashing repeatedly even after force quitting the app and rebooting. It was quite bizarre. That combined with Rdio introducing improved station customization and I was pulled back over there. For me it is much better now and I'd love to have it integrated into my iPhone at a system level, especially with the power of Siri.

 

[Exponent]

4. 3.2 Billion is such a small amount of of money as compared to Apple's War Chest there is no way this is every going to be a bad deal no matter how much kvetching the Grado or Sennheiser fans do.

Of course this video shows that this would be a bad deal.

What is the NUMBER ONE thing that Steve Jobs worked on as his life was ending. Was it AppleTV? No. Was it a watch? No. It was a project to preserve Apple's Culture. It was "Apple University", to teach executives to "think like Steve Jobs".
http://appleinsider.com/articles/11/10/06/apple_university_revealed_as_plan_to_teach_executives_to_think_like_steve_jobs

Now, watch that video, listen to those vulgar drunken clowns. As someone who lives smack dab next to Apple, and has seen both the good and bad side of their culture, the people on that video are completely alien to the culture and thinking that Steve Jobs built up.

Next, did you see the reaction when Dre made the mention of "West Coast"? Do you have NO MEMORY of the bloody West Coast vs. East Coast rap wars?!? Tupac Shakur? Biggie Smalls? You think that kind of **** would be allowed to go down inside of One Infinite Loop, let alone the Conformist Chinese Colony of Cupertino?

Ultimately, it gets down to this. "A" players hire "A" players. "B" players hire "C" players. The people in that video are "Z" players. There isn't anyone in the Silicon Valley who would wear the newly invented letter of the alphabet needed for any of these slugs to be "the boss".

 

[mozumder]

lol.. my last post a few days ago was about Apple canceling this deal because of Dre's blabbing. Totally knew they were gonna cancel, as that's the Apple I know and love.

Don't care what it's about - you keep all your operations secret until it's ready to announce.

 

[CarpalMac]

I didn't think that video Dre made would help the negotiations. It came off very smug and I'm sure Tim Cook didn't like it one bit.

As it says in the article, I think the sheer smugness of the video will be the very least angering point of it to Apple and more to do with the tone and content. If the deal was ever to be confirmed and the worlds press decide to get their teeth into the story, Apple have suddenly ditched all their clean cut marketing and branding in one go and linked themselves to a gangster rapper who kicked it all off with "**** da police" and the like. Should make for a few juicy headlines and trust me, branding for any successful company is a very highly guarded aspect, particular in one one of the worlds most valuable firms with shareholders to keep happy.

Whilst some say that any press is good press, I think on this one there is not enough billions in their bank account to come back from such a marketing, branding nightmare, regardless of whether the business case stacks up. F this, N that - not exactly corporate America now is it.

 

[lk400]

You know I hate to be that guy, and I never thought I would be, but I'm going to invoke Steve Jobs, here. We all know that Steve Jobs would have immediately canceled any in-progress deals if the other party leaked it. It happened a bunch of times, as I recall, over a bunch of deals and with companies a lot bigger than Beats.

Obviously this is a new Apple under Tim Cook, and Tim Cook isn't going to just do what Steve Jobs would have done, but in this case, I wouldn't be surprised if they both would do the same thing. Tim Cook made it clear he cares about secrecy.

Did the other party leak the deal here? I've only seen rumors, probably started by some lawyer or accountant or banker if the deal is really happening. I also only saw a video taken by someone partying with dre when he made some vague comments about money. Did I miss something?

 

[Polansky]

Buying companies like Beats is the exact reason why Apple seems to loose it sex-appeal.

It shows Apple lost track on their horizon.
Loosing vision is what makes a company weak.

Hope the tide will turn.

 

[Arndroid]

I like gruber but there is zero chance the deal was scuttled because of the leak.

Clearly the deal was not yet finalized and all kinds of things can complicate or even scrap a deal, the idea that the Facebook video would have caused the deal to be scrapped is absurd. It would paint apple executive's as petulant children, way beyond that over an over exubetient Dr. Dre.

This is not a simple deal and has a lot of moving parts including multiple pieces that the two sides value differently. However the idea this was scuttled because of the leak (the deal was already in the financial times and the Wall Street journal before the video and which side was more likely responsible for that) is just off base.

Gruber has been a bit butt hurt about the entire thing because his sources never shared anything about it and thus he acted completely in the dark even when it was clear it was a deal being negotiated. His position literally went from being skeptical a deal was ever happening to it allegedly being scuttled for silly reasons.

Not sure what to believe at this point. Regardless of apple's desire for the streaming part of the business, it is such a tiny fraction of the value of the deal that I find it hard to believe that is the sticking point. Integrating iovine and Dre always seemed weird to me, so how exactly that might be accomplished, if at all, seems like the most legitimate area for continued negotiation.

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I like Gruber's take on things. Then again, why would Apple pay that much money for something that could be ruined so easily by a leak?

Gruber doesn't have a take on things. He pretty much just buried his head in the sand pretending it did not exist until coming up with it would be called off because of a leak.

Gruber has never been more out of touch on an apple story that I can remember and I am a fan, but he is a source of no information on this and this is wild arde speculation.

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Leave now while you still have the chance!!! It's way over priced

How many businesses have you bought in your life?

I ask because you make a statement like you have some experience or expertise. It has been explained over and over by people who know what they are talking about it is not overpriced. It is actually a good value with a big upside.

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Why don't they just acquire Spotify? Worth approximately 4 billion and has a big and fast growing client base.

They could then just offer Iovine an executive rol without buying Beats.

Spotify is not worth four billion dollars. And it would actually cost quite a bit more than that to buy it.

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Apple should just buy spotify. The beats headphones are crap and dr. Dre is ridiculous and unprofessional.

Yet his company makes money and spotify loses money/

I know business basics eludes many here but making money > losing money

 

[Nevaborn]

Guess you missed the memo.
Apple lost that title this week to Google.
Just do a search. Covered at every major media outlet other than this one.

Brand Image is awarded for how well you hide this crap your doing from the public. If people knew how Google data mine their users many would not like the brand very much.

 

[Arndroid]

You know I hate to be that guy, and I never thought I would be, but I'm going to invoke Steve Jobs, here. We all know that Steve Jobs would have immediately canceled any in-progress deals if the other party leaked it. It happened a bunch of times, as I recall, over a bunch of deals and with companies a lot bigger than Beats.

Obviously this is a new Apple under Tim Cook, and Tim Cook isn't going to just do what Steve Jobs would have done, but in this case, I wouldn't be surprised if they both would do the same thing. Tim Cook made it clear he cares about secrecy.

The story was already leaked before the Dre video. The financial times reported the story first. If is actually more likely someone associated with apple or their law firm leaked to the financial times than someone at beats did.

The idea that Steve would have scuttled the deal for the Dre video is not based on any reality.

 

[mtneer]

I like Gruber's take on things. Then again, why would Apple pay that much money for something that could be ruined so easily by a leak?

While I can understand shaken confidence in Dre and Iovine due to the leak, but how would the deal be "ruined"? It's not like the leak would trigger a bidding war or open Apple up to any embarrassing revelations. The valuation would have come out sooner or later.

 

[Arndroid]

So, Beats streaming app is just a branded version of some other app that's not even that good? And Apple's spending $3.2 BILLION to acquire this crap along with mediocre headphones? And two guys are suppose to be the "prize" and worth this huge acquisition?

I wish Steve Jobs were alive Tim Cook is so incredibly inept and lacks long-term vision. Google, Facebook and Samsung must be laughing.

Yeah apple looking at buying a company that makes tons of money instead of a thermostat company that makes no money or an insane amount of money on a text app that has zero chance of ever recouping even a fraction of its cost. Let us not forgot Mototola. All these companies buying other companies who lose money sure are making apple dumb for pursuing a very profitable company.

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Apple please spend the extra money and just try to buy spotify. If you really want to buy a headphone company make an offer to Audio-Technica

You should stick to getting an arts history degree. That combination of purchases make no sense and would be magnitudes worse than buying beats. Buying a company that loses money and another with no market share is not better than buying a highly profitable company with dominant market share.

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Just watched the video. If the Apple family is worried about what they saw, then I really wonder how they think a professional rapper might celebrate a billion plus dollar deal? I've celebrated the closing of much smaller deals in much more wild fashion than a few boasts and claims of knocking back some Heinekens. But I'm a reasonable and prudent guy who puts in a hard days work and gets results. But at parties, I party. This was a video from a party.

If you want the cred of folks like this, you have to understand the actions and behavior they will bring. In fact, they have to continue to exhibit certain behavior in order to maintain the very cred that you want to be associated with. Would Paris Hilton have become a an international celebrity if she had acted reasonable and prudent every day? Celebrities need to add buzz in order to maintain their currency. This was a modest bit of boasting. Nothing to see here in my opinion.

Probably plenty of reasons not to spend $3.2 billion on Beats. But Dr. Dre boasting about a legitimate and impressive milestone and using some swear words is not a good reason to not do a deal.

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But do you cancel just on principal? If the counterparty is leaking in order to get a competing offer, that might be unfair. So you cancel. Or if they are leaking and thereby giving advance notice to your competitors, that might be a problem. But I don't think you cancel a deal just based on principal. Not if there are billions of dollars at stake. And Apple wouldn't do a deal of this size if they didn't think they would make at least a billion in profit in the next few years. Anything less than that would make the deal not worth the money combined with headache.

You are spot on. Plus the deal was already well known before the Dre video. Tying him to leaking the deal makes no sense. The outline of the deal was in the media before the Dre video was even made.

 

[superduperdom]

Vomit inducing. A sad day if this goes through.

 

[Arndroid]

Or it's been called delayed to cover up that it was neve true and the sites etc don't want to look like morons for stating a way off rumor.

In another week there will be another delay or issue, maybe another. And then we'll find out that they couldn't come to an agreement and the whole thing is off

I will agree the delay issue seems wholly media related. These deals get done when they are done. When mr had a story last week about the finalizing of the deal being delayed it did not ring true simply because that is not how this stuff works.

They are not up against any hard deadlines here and certainly while there might be expectations of a closing date it was not some kind of important deadline. That is still the case/

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Has there been ANY leak - from Apple ??

It's three weeks on and there has been nothing that I have heard - official or otherwise. I don't know if that's a "message" - it might be.

How about the source of the intial Financial Times report?

 

[thaifood]

To all the whiners; I'm sure the big guys at Apple have got a far better grasp of the deal and how an acquisition like this will be beneficial for their future plans.

Armchair professionals here with no idea

 

[macs4nw]

…..Give it a rest...Apple is buying Beats..get over it.

Not so fast, maybe they are, maybe they're not; so far we've only got rumors. Maybe Apple got cold feet? From where I'm sitting, Dr Dre, in spite of all his accomplishments and talents, just doesn't seem such a great fit within Apple's culture. Just one man's opinion.

It's clear to see how Jimmy Iovine's connections in the music world could be invaluable to Apple. Why not just hire him as a consultant? Buying Beats is no guarantee Dr Dre and Jimmy Iovine are going to stay with Apple, to justify that (for Apple) unprecedented price tag cause, lacking their presence, it's hard to imagine how a streaming service with ~200,000 subscribers plus a line of headphones are worth $3.2 billion.

It'll be interesting to get to the bottom of this, in the coming months.

 

[Taipan]

If Apple really aqcuires Beats, I expect Dre and Iovine to leave the company within a few months.