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Apple's Acquisition of Beats Met with Skepticism, but Jimmy Iovine May Be Key
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I believe it's generally understood that Apple is after more than a fashionable headphones business, but since you mentioned this, name one.
My post was in response to someone saying the headphones were a major if not the main reason of the deal.
I explicitly did not mention any of the respected vendors because I am not favouring any one in particular.
Now, some are family businesses that have been around for 50 years and may have no interest in selling out to Apple at any price.
It might be that fad, hype and endorsements is all Apple is able to buy at this time. Or worse, that that is what they are interested in.
Right, this deal makes no sense, at all.
Even assuming (no assurances that it can) the efficacy of successfully integrating Beat's streaming music platform into iTunes, a price of $3.2 Billion is wasteful capex spending at its best. Most buyouts of this kind never work out. If Apple pulls this off, it'll be in rarified company.
The headphones are meaningless. Apple's intention here is for the streaming music platform to reinvigorate iTunes.
After a staggering quarter with higher iPhone 5 sales even with iPhone 6 looming, large one time dividend and stock buyback, Tim Cook goes and does this--pay far and away more than Apple ever has on any kind of purchase.
Unbelievable.
If anything, the selloff on stock was less pronounced that I would have expected, especially since this purchase implies Apple, a company founded on innovation, can't even create a streaming music platform organically.
Let's see if there's a further sell off on the stock when the deal is confirmed.
Yes, simple and makes perfect sense. But, at $3.5 Billion, it becomes sheer lunacy.
You're assuming this can be replicated in the future. Fads aren't sustainable. Odds are that Beats will be an afterthought in several years, not cranking out $500 Million in profit year over year.
I am making a positive assumption and you are making a negative assumption. That's the only real difference.
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I think you did not mention any of the others because there is nothing to actually mention.
I'm sorry that you can't use logical and critical thinking skills. Here's some help for you: Something can have 99% market share and not be the best. Quality is not measured by sales.
I am a fan of A number of Beats products. They don't make the best headphones. Most professional recording studios use Sennheiser headphones because they offer better overall quality audio then Beats. Beats are bass heavy and are designed that way. I have a set of beats earbuds and a set of headphones. I love them both. Neither offe the best quality on the market.
You can be a fan of something and know it's not the best. I'm a fan of trashy reality tv. It's not even close to the most quality programming on TV. I can't tell if you're "special", a child or trolling.
That's still $18 billion! Plenty of US-held cash for a $3.2 billion acquisition.
Yep. Not sure why you think that equates to this potential acquisition.
This is a link to a BGR article, which does not even reference a Bloomberg article. From an actual Bloomberg article, it appears that Apple's overseas cash holding are $54B. So that's around 35%, not 80%, and $100B held domestically, not $18B.
http://www.bloomberg.com/infographics/2014-03-12/offshore-profits-avoid-irs-reach.html
mmm... you might be unto something. I heard B has patented a technology that use earphone for:
1. health measurements
2. augmented reality
3. wearable technology
4. smart-earphone or iEar with Siri up close
5. Location information awareness through iBeacon
Or just because B comes after A, so next Apple is gonna buy Canon for the sake of completing ABC.
In my view, I'm making a realistic assumption. To wit: if the owners of Beats were assured of realizing $500 Million net profit year after year, would they sell for a measly $3.5 Billion?
In the streaming music industry with meager profit margins, to expect Beats will continue netting $500 Million per year based on their fledgling though new and hip music streaming business and headphones is not merely positive, but "exuberantly" positive.
All things being equal, for Beats to realize $500 Million net profit year over year for the next 10 years would be extremely remote.
Naturally, your assumption is realistic. Apple, the company spending the actual money, is making the unrealistic assumption.
Gotcha.
Sorry about the link. For some reason I cannot link the Bloomberg article but I cut and paste the relevant piece.
Apple Inc. (AAPL) issued $12 billion of dollar-denominated bonds as the iPhone maker seeking to reward shareholders locked in a cheaper alternative than overseas cash that’s subject to repatriation taxes.
The sale included $2.5 billion of 3.45 percent, 10-year notes that pay 77 basis points more than similar-maturity Treasuries, according to data compiled by Bloomberg. The spread was less than the approximately 90 basis points that was marketed earlier today, according to a person with knowledge of the transaction.
By taking on more debt, the world’s largest technology company by stock-market capitalization is sticking to its efforts to keep its U.S. tax bill low. Borrowing costs in the bond market are much lower than the levy on any money repatriated on Apple’s balance sheet that’s considered to be held overseas. Of the $151 billion Apple has in cash and marketable securities, about 88 percent is held offshore, the company said on an April 23 earnings call.
Bloomberg article April 2014.
The link you provided has nothing to do with Cash but profit. Apple declares low profits overseas to avoid tax. They are double dipping not paying tax overseas and not paying tax in the US.
Got the link now.
http://www.bloomberg.com/news/2014-...-market-to-scale-biggest-borrowers-ranks.html
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What is Apple getting from Beats?
They could make their own streaming service (or should have bought a better one), and they certainly could make "premium" headphones.
I can see Apple being interested in what Beats makes (headphones and streaming music; to a lesser extent integrated audio), but the Apple brand is stronger and reproducing Beats main products wouldn't be very difficult.
Wow I'm really surprised by many of your rantings here in this thread. Many of you sound really really ignorant. Here we have one of the most valuable successful companies in the world who obviously got there by practicing smart insightful strategic business manuvers, and yet you question a possible acquision that you have absolutely no insight on...Do you really think a company like Apple would pay $3 Billion on the stength of some trendy headphones ONLY? something they can easily make themselves...Wow you guys c'mon now...
Incorrect on what the Bloomberg article said.
http://www.bloomberg.com/news/2014-...es-206-billion-as-apple-to-ibm-avoid-tax.html
I can't explain why the other article said it was 88%. I have never heard a figure that high. This one was very specific as to the dollar amount.
If that were the case every teenage kid would be walking around with AKGs or SennHeisers or whatever on their head. The Beats sound is coloured intentionally because flat response and audiophile quality is boring. Yes it's better, technically it's better. But NO ONE except audiophile weenies care about that.
Yes an accessory like many others that are also sold in the stores. does not make them Apple
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Well I disagree with you. People aspire for high quality products with great design, it crosses all age gender binds.