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Report: Apple/Beats slowed down by financial details, fit concerns

  • Apple (AAPL) "nearly imploded with outrage" when it caught wind of a video featuring (colorful) remarks from Dr. Dre that appeared to confirm Apple is acquiring Beats, Billboard reports.
  • Billboard, which has plenty of music industry sources, still hears a deal is happening, but also reports hearing various issues have slowed down the process, with the video being one of them.
  • Others include: 1) The sheer size of the deal - Apple is used to buying smaller companies. 2) Concerns about how Dr. Dre and Jimmy Iovine will fit; Apple reportedly isn't sure if they should be consultants or full-time employees. 3) Negotiating a price for the Beats Music streaming service, which is only partly owned by Beats Electronics.
  • The magazine also states (citing a source "in and around" the talks) Apple was "nowhere near ready" to have media reports of the deal break when they did.
  • Previous: Sell-side commentary on Apple/Beats
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Comments (46)
  • Patent News
    , contributor
    Comments (1455) | Send Message
     
    1. not surprising 2. apple is a public company why do they expect others to cave to dictatorial demands? 3. it's still overpriced and overhyped deal
    23 May 2014, 06:02 PM Reply Like
  • ebeuu
    , contributor
    Comments (379) | Send Message
     
    Why did you guys announce it, then?
    Fire someone and move on.
    23 May 2014, 08:23 PM Reply Like
  • tiger8896
    , contributor
    Comments (668) | Send Message
     
    I was telling my wife that was the last thing Dre should have done was go on You Tube bragging on how Apple was about to make him a billionaire.

     

    Beats needs Apple more than Apple needs Beats, I would negotiate the deal down by about a billion dollars after that blunder by Dre and tell them take it or leave it.
    23 May 2014, 06:05 PM Reply Like
  • bgold1955
    , contributor
    Comments (2284) | Send Message
     
    Don't believe Dre would be stupid enough to upload to YouTube but obviously someone did & that's all that matters. Foolish.
    23 May 2014, 06:07 PM Reply Like
  • gelstretch
    , contributor
    Comments (3042) | Send Message
     
    I agree tiger8896....This deal is far from over, and Apple needs to begin the negotiations anew... Dr Dre will be a negative, unless contained in a closet. Not sure he is of any benefit to the deal....hip-hop notwithstanding.
    23 May 2014, 08:12 PM Reply Like
  • King Rat
    , contributor
    Comments (1021) | Send Message
     
    In the closet? I thought that was R Kelly.
    24 May 2014, 01:56 AM Reply Like
  • drive-by poster
    , contributor
    Comments (53) | Send Message
     
    Dre put it on Facebook, not Youtube. It didn't stay up long but someone grabbed a recording of the video and reposted it on Youtube.
    24 May 2014, 03:50 AM Reply Like
  • scott trader
    , contributor
    Comments (5950) | Send Message
     
    Apple has more class than the company they are allegedly buying.... No wonder they are upset.............using unpatriated cash is a big plus though if the deal goes thru...obvious to me is they could have bought monster if they just wanted the technology....
    23 May 2014, 06:05 PM Reply Like
  • jjkiam
    , contributor
    Comments (390) | Send Message
     
    This deal will be done. Apple wants Dre and Iovine.
    The rest is simply icing. But the real question is the final price.
    Doubtful that the deal gets done for the reported 3.2b.
    And also the strong possibility that Apple can use offshore revenue to complete the transaction makes it only more attractive
    23 May 2014, 06:10 PM Reply Like
  • believer18
    , contributor
    Comments (203) | Send Message
     
    Hope not, Apple needs to walk away now!
    23 May 2014, 07:20 PM Reply Like
  • theantiantihero
    , contributor
    Comments (119) | Send Message
     
    "...Negotiating a price for the Beats Music streaming service, which is only partly owned by Beats Electronics."

     

    So, if the main driver of this deal really is music streaming, gaining control of that would cost AAPL even more than the 3 Billion already quoted? Based on the price Carlyle paid a couple years ago, it looks like they're already overpaying as it is and you can bet whomever owns the remaining interest in the streaming service will hold out for a huge payday.
    23 May 2014, 06:11 PM Reply Like
  • milehr
    , contributor
    Comments (547) | Send Message
     
    Nice video. Heheheh. This kind of "art" will be widely despised and laughed at in 10-20 years, but Apple's brand will suffer irreparable damage.
    23 May 2014, 06:14 PM Reply Like
  • believer18
    , contributor
    Comments (203) | Send Message
     
    Hope the deal doesn't go through, Apple doesn't need any dirt on its logo
    23 May 2014, 07:18 PM Reply Like
  • name999
    , contributor
    Comments (179) | Send Message
     
    A video might cost someone over billions. This video can be considered as a contender for the most expensive video in history :P
    23 May 2014, 06:24 PM Reply Like
  • User66224
    , contributor
    Comments (207) | Send Message
     
    If this whole thing was a trial balloon, let it fly away. There's no kid inside.
    23 May 2014, 06:32 PM Reply Like
  • jej
    , contributor
    Comments (70) | Send Message
     
    Please Tim Cook, do not sully the great name of Apple with this trash, no matter what the financials say.
    23 May 2014, 06:38 PM Reply Like
  • believer18
    , contributor
    Comments (203) | Send Message
     
    Well said
    The principals at beats dre are obviously classless. APPLE today is one of the most recognized brands in the world like COKE. Where is beats dre brand recognition...Not
    23 May 2014, 07:16 PM Reply Like
  • yentrog31
    , contributor
    Comments (53) | Send Message
     
    Ditto. I liked the deal when I first heard it. All that cash under the mattress isn't doing anything. But now I don't want Apple to be associated with these drunken/high fools.
    23 May 2014, 08:38 PM Reply Like
  • JMajoris
    , contributor
    Comments (1361) | Send Message
     
    Beats is a great bolt on acquisition. Long after the "classless principals" are gone Apple will be rockin and rollin in the ca$h.

     

    Keep the faith and ye shall be rewarded nicely ;-)
    24 May 2014, 09:33 AM Reply Like
  • inside man 55
    , contributor
    Comments (1024) | Send Message
     
    In the long run the record industry needs a company like Apple to have good streaming technology. Purchases of songs and albums are declining and current streaming firms pay a pittance to record companies. Forget the song writers. Given that the deal was not close to finished and Dre's drunken video outburst I wouldn't be surprised if Apple hire Iovine and Dre as consultants. What Apple needs to do is democratize the ability for song writers to publish songs and music, similar to what Amazon did with ebooks and self publishing. That would truly be out of the box.
    23 May 2014, 06:42 PM Reply Like
  • rickraff
    , contributor
    Comments (318) | Send Message
     
    I never understood the need for Apple Inc. to buy Beats.
    Apple Inc. would be wise to walk away...
    23 May 2014, 07:54 PM Reply Like
  • lenniefalcon
    , contributor
    Comments (38) | Send Message
     
    Iovine will be next useless to Apple. Dre is a Gold Plated Gangsta rapper, adds nothing to the deal. Their streaming is vastly overvalued. HTC and Carlyle want out at an inflated value. Their "b" logo is owned by Bloomingdales. The technology sounds like crap, both streamed and headphones. Noel and Nelson Lee will have to be paid or they'll be enough of a nuisance to possibly derail the deal. So what does Apple really get, duh!
    23 May 2014, 08:04 PM Reply Like
  • ebeuu
    , contributor
    Comments (379) | Send Message
     
    Fire the idiot who revealed the Beats deal.
    Apple gear is the best of industrial design...Beats looks alien and not integrated at its best; was this for "ears" or is Steve Jobs rolling over in his grave?
    23 May 2014, 08:28 PM Reply Like
  • duhaus
    , contributor
    Comments (320) | Send Message
     
    "Dr." Dre may have just performed the first ever walletectomy on himself
    23 May 2014, 09:10 PM Reply Like
  • NY2LA 1
    , contributor
    Comments (716) | Send Message
     
    I have worked with icons of hiphop and music and tech, there is no way this is a good fit. If if Apple is buying rights to music or licenses maybe. But a corporate integration or buyout is failure. Absolute write off in 2 yrs time. A waste of time and distraction. Additionally, it will diminish the tech leaders inside Apple whom rightly feel they are being cast aside for the hot girl of the moment.
    23 May 2014, 10:39 PM Reply Like
  • scott trader
    , contributor
    Comments (5950) | Send Message
     
    Be better off with Jay z and Beyonce....
    23 May 2014, 11:54 PM Reply Like
  • HuFlungDung
    , contributor
    Comments (266) | Send Message
     
    Jimmy Iovine is an interesting character who has a refined and polished side. I could see him being a part of the Apple post acquisition, and perhaps help put together content deals, as well as implement his futuristic curation ideas.

     

    On the other hand, Dre and the rest of the gang look act like a bunch of juvenile gang members. Does anybody really see them fitting in with Sir Jony Ive, Angela Ahrendts, Eddie Cue, Craig Federighi, Tim Cook, et al?

     

    The deal might still happen, but I would guess Apple is now negotiating new terms that would require Iovine to be a part of Apple and Dre & Co. to agree to never, ever set foot in Cupertino or perhaps, Santa Clara county.
    24 May 2014, 12:23 AM Reply Like
  • bill mac
    , contributor
    Comments (5) | Send Message
     
    Poor cheese pretentiously wrapped
    24 May 2014, 01:08 AM Reply Like
  • SA User 74XXXXX
    , contributor
    Comments (773) | Send Message
     
    I wished that the Beats founders were self motivated to become so sticky to Apple.

     

    Apple should buy real technologies, not brands, and pursue organic growth as always.
    24 May 2014, 02:18 AM Reply Like
  • pocohonta
    , contributor
    Comments (646) | Send Message
     
    An apple a day "should've" kept the Dr. Dre away. Or at least that was what the 3rd grade teacher said.
    24 May 2014, 09:15 AM Reply Like
  • Bradmeister
    , contributor
    Comments (708) | Send Message
     
    Apple would be better off scrapping this deal and either (1) building its own service, or (2) seeking to buy Spotify. The latter option would be more expensive than buying Beats, but vastly superior in terms of user interface and market share.
    24 May 2014, 11:23 AM Reply Like
  • faramarz
    , contributor
    Comments (329) | Send Message
     
    B Apple buys beats for 3.2b using money sitting on the balance sheet earning +/- 2% annualy. Apple adds a minimum of 1.3b to their top figure with probably 55% GM. The net income will be +/- 25% in line with Apple's average net income. That is 0.325b or 325M. 2% annual income from 3.2b cash is only 0.064b or 64M.
    Conclusion. Buying beats and putting 3.2b at work is equivant to making annualy 260M more earning. This is not taking into account the synergy of the deal or the profit that Apple can have from streaming business or any further technical developments.
    Apple is certainly seeing some future like applying some of their patented innovations to the allready existing line of business.
    I would like to remind everyone that Google bought Nest which had only 800M revenu for 3b a few month ago. Everyone claimed this to be a very good deal and Google's stock gained almost 5% the next week.
    24 May 2014, 11:30 AM Reply Like
  • Andreas Hopf
    , contributor
    Comments (12058) | Send Message
     
    Just because "everybody" claimed Google's Nest acquisition having been a good deal, that does not mean that it really was.
    24 May 2014, 12:49 PM Reply Like
  • stela
    , contributor
    Comments (10) | Send Message
     
    check out this news analysis on Apple and beats deal. bit.ly/1jTMf27
    26 May 2014, 04:58 AM Reply Like
  • kimboslice
    , contributor
    Comments (1683) | Send Message
     
    Apple's brand is impeccable and built upon high tech of the highest quality.

     

    Beats headphones are not 1. high tech 2. highest quality

     

    The other aspects of clowns like "Dr. Dre" (his real name?) bragging about this deal are exactly why Apple needs to be careful not to tarnish their brand with this guy.
    24 May 2014, 01:36 PM Reply Like
  • stela
    , contributor
    Comments (10) | Send Message
     
    see how apple is not letting down beats. bit.ly/1jTMf27
    26 May 2014, 04:59 AM Reply Like
  • Adam Smith, Jr.
    , contributor
    Comments (9) | Send Message
     
    This isn't a deal that Steve would do.
    24 May 2014, 02:25 PM Reply Like
  • Equitable Research
    , contributor
    Comments (2172) | Send Message
     
    I've been saying from the beginning for those not to count their chickens before they hatch and this confirms it. While I never thought it was a terrible deal for Apple the way some have, I'm sure this video is evidence of a violation of an NDA that Beats has with Apple at the very least. If the deal does happen, expect Apple to negotiate more favorable terms based on this violation. Given Dr. Dre's violent criminal record, including assault on a female reporter, the idea of making him an employee of Apple is absurd and I don't think will ever happen.
    24 May 2014, 02:59 PM Reply Like
  • shoff
    , contributor
    Comments (7) | Send Message
     
    Run away. Their products are sub-par. Develop your own or acquire another company with a respected brand image. Do you really need Iovine and Dre as consultants? That Apple TV we have been waiting for will never reach the market once the smoke from Dre's office hits the halls of Apple. CHRONIC. --DRE DAY --Easy E!!!!
    25 May 2014, 05:59 AM Reply Like
  • DeepValueLover
    , contributor
    Comments (10032) | Send Message
     
    Inside the Apple boardroom several weeks ago before the merger rumor began...

     

    "If you can't trust a violent gangsta rapper then who can you trust?"

     

    "Agreed, let's make this deal happen!"
    25 May 2014, 11:38 AM Reply Like
  • stela
    , contributor
    Comments (10) | Send Message
     
    i read this article and it says some really important things about the deal. bit.ly/1jTMf27
    26 May 2014, 05:02 AM Reply Like
  • Ron Alwin
    , contributor
    Comments (62) | Send Message
     
    Iovine worked with Jobs helping with the rights for itunes...Dre brings the masses to the iso ecosystem.....Samsung is everywhere with the young people at concerts etc trying to get their products accepted hoping to get a inroad like APPL already has. This is a vast audience ...DJ's make up to 20 million a year and have large followings. Samsung is sponsoring a lot of these events or have parties or co-events just trying to stop the momentum of apple with the teen or young adult crowd. Apple must be aware of this, but it doesn't do this as it is not in its DNA...but Dre and Iovine can bring this to them with beats and their music streaming.
    Also the talk of Bose or others and the talking down about audio quality of beats which many have pointed out that apple could do better themselves. Well of course they could make their own headphones and better than beats.....but wait they would have to compete with them....hum why not buy the largest competitor and make them better plus get the cool factor etc etc...maybe all along Apple wanted to add a headphone to the line up and killed a few birds with one stone.
    26 May 2014, 02:01 PM Reply Like
  • shoff
    , contributor
    Comments (7) | Send Message
     
    You make an excellent point. I think they need to improve the quality of the beats product line in general and develop a high end model with a low-profile (discrete branding). Hopefully something is in the pipeline.
    22 Jan, 07:43 PM Reply Like
  • cparks_reno
    , contributor
    Comments (10) | Send Message
     
    Trying to imagine how fast a mid level Apple manager would clear the door for a rant containing far less invective. Welcome to the Apple Executive wing Dr. Dre don't bother unpacking.
    27 May 2014, 12:53 PM Reply Like
  • Manitobatex
    , contributor
    Comments (968) | Send Message
     
    I wish a SA contributor would do an article on those people who stated that the AAPL/Beats deal was not going to happen.....take those names and every time those people make unqualified statements a copy of their APPL/Beats words should be posted every possible opportunity on the subject they are addressing/commenting on....or better yet....Ban them from commenting.
    28 May 2014, 08:47 PM Reply Like
  • Shaduc
    , contributor
    Comments (2145) | Send Message
     
    I didn't believe Apple would do it with Beats, this is an investing site where people comment on their perceptions.

     

    Maybe Manitobatex, needs to chill a bit!
    28 May 2014, 09:13 PM Reply Like
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