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Report: Apple cuts Beats price to $3B, expected to announce this week

  • Apple (AAPL) is expected to announce it's acquiring Beats Electronics this week, but has cut the acquisition price by $200M to $3B, the NY Post reports.
  • The Post states the fact Beats Music had only 111K subs as of March may have affected the deal's price. "Apple hadn’t even begun its due diligence process when news of the number came out."
  • Billboard reported a few days ago attempts to negotiate a price for Beats Music (not fully owned by Beats Electronics) was one of the factors slowing down buyout talks, and that Apple was "nowhere near ready" to have the talks leaked to the media when they were.
  • The paper also reports Beats, which likely reaps high margins on sales of its pricey headphones and speakers, had 2013 revenue of $1.3B - that suggests Apple is paying just 2.3x sales.
  • Apple's WWDC conference starts in 5 days.
  • More on Apple/Beats
Comments (43)
  • Patent News
    , contributor
    Comments (1312) | Send Message
     
    they should cut it back a little more since apple has the leverage.

     

    we havent heard about any other companies jumping in
    28 May, 09:26 AM Reply Like
  • milehr
    , contributor
    Comments (475) | Send Message
     
    They should cut it to zero. If this is true, the leverage is on the other side - a tape recording or something.
    28 May, 09:38 AM Reply Like
  • David at Imperial Beach
    , contributor
    Comments (3187) | Send Message
     
    It's mind-boggling that Apple would pay anything at all for Beats. Headphones? Surely you jest! If an Apple engineer can't design a world-class set of headphones in his sleep he should be fired. Same for a streaming music service. If Tim Cook wastes $3B of the company's money on this boondoggle the investors should hang him by his dangly bits.
    28 May, 10:01 AM Reply Like
  • Hank890
    , contributor
    Comments (676) | Send Message
     
    Dav, you appear not to be considering the whole picture,...
    28 May, 11:39 AM Reply Like
  • Small Fry
    , contributor
    Comments (249) | Send Message
     
    Beats is not a tech company. It's a luxury goods label like Burberry. Luxury goods makers are characterized by selling products at high margins to people with high disposable incomes which fits in with Apple's model. Apple would never buy a company with nonexistent margins like Pandora or Spotify. Just like Apple would never sell a low-cost, low-margin iPhone, not even in emerging markets (the 5c was not low margin).

     

    Apple has some of the best engineers. They don't need to acquire technology or patents. But, if Beats allows them to reach a part of the luxury market they aren't reaching with the Apple brand (e.g., minorities who generally go for Android products), then it's a good fit.

     

    Imagine how much better Beats headphones will be once Apple engineers are designing them.
    28 May, 11:54 AM Reply Like
  • milehr
    , contributor
    Comments (475) | Send Message
     
    Not everything that expensive is luxury.
    28 May, 01:25 PM Reply Like
  • DanoX
    , contributor
    Comments (2577) | Send Message
     
    The streaming software MOG/Beats music works better than the streaming radio software added on to iTunes in recent times. Beats isn't that bad.

     

    http://bit.ly/1ntetlD

     

    http://bit.ly/1mnifso

     

    https://mog.com
    https://mog.com/#!what

     

    Long AKG K240 DF (less bass) Sony MDR V-900 (more bass)
    28 May, 01:43 PM Reply Like
  • Mark Krieger
    , contributor
    Comments (3765) | Send Message
     
    only cut it $200 million...seems like they are being too easy on them-You certainly don't want to overpay.
    28 May, 10:05 AM Reply Like
  • duhaus
    , contributor
    Comments (308) | Send Message
     
    At $200mm that you tube video may have been the most expensive one of all time. Note to the "Dr.", talk BEFORE you drink.
    28 May, 10:24 AM Reply Like
  • pmiller100
    , contributor
    Comments (353) | Send Message
     
    This whole thing is starting to sound amateurish. How does a 'deal' get leaked before the prospective buyer even begins due diligence to figure out what they might be willing to pay for the prospective purchase?

     

    Bizarre, and rather uncharacteristic of AAPL.
    28 May, 10:31 AM Reply Like
  • inside man 55
    , contributor
    Comments (668) | Send Message
     
    Perhaps it was not Apple that did the leaking? They have had numerous acquisitions go off without a hitch.
    28 May, 10:45 AM Reply Like
  • Hank890
    , contributor
    Comments (676) | Send Message
     
    It was not AAPL,...it was clueless staffers on Dre's posse,...Dre should have controlled them,...he did not.
    28 May, 11:41 AM Reply Like
  • DanoX
    , contributor
    Comments (2577) | Send Message
     
    Apple is Doomed THEY DO ANY THING RIGHT BUT MAKE ME MONEY.
    28 May, 01:47 PM Reply Like
  • Hank890
    , contributor
    Comments (676) | Send Message
     
    perhaps you buy at the wrong time Dano?
    28 May, 01:54 PM Reply Like
  • pmiller100
    , contributor
    Comments (353) | Send Message
     
    In fact, I'm out. When a technology innovator now can't keep secrets and tries to talk business with guys like what I saw blathering every cuss word they know on u-tube, well, not the same AAPL anymore. Actually, it's more similar to the original AAPL that almost went out of business than the follow-on AAPL that built up such a stellar balance sheet. But either way I'm not all that far from my price target and I've lost a lot of comfort with this company now.
    28 May, 10:44 AM Reply Like
  • DanoX
    , contributor
    Comments (2577) | Send Message
     
    Keep secrets like Microsoft or Google? Apple does very well in the tech world in that regard.
    28 May, 01:50 PM Reply Like
  • duhaus
    , contributor
    Comments (308) | Send Message
     
    Goodbye, don't bother to close the door behind you, hopefully a lot more "critical thinking" investors will follow you and I can buy some more shares on a dip.
    29 May, 01:45 PM Reply Like
  • medzjohn
    , contributor
    Comments (218) | Send Message
     
    If I was a gambler I'd wager the Carlyle guys will beat Apple out of a healthy chunk of its hoard of funny money.
    28 May, 10:49 AM Reply Like
  • Hank890
    , contributor
    Comments (676) | Send Message
     
    Carlyle is VERY good,...this deal proves it. But AAPL may get plenty out of this deal---and the price hardly breaks their backs. I admire considered, insightful, risk taking,....that is what this deal looks like to me.
    28 May, 11:44 AM Reply Like
  • Jack Baker
    , contributor
    Comments (886) | Send Message
     
    It's funny that people are drawing such draconian conclusions from this supposed acquisition that some see it as the end of APPL. Understand one thing: Apple does not make stupid acquisitions and they certainly don't overpay for anything. If....IF they buy Beats it will be for reasons and hidden equity that the average lay person cannot see. They would certainly NOT be buying BEATS for their headphone business.
    28 May, 10:51 AM Reply Like
  • pmiller100
    , contributor
    Comments (353) | Send Message
     
    Another factor in my loss of confidence is the blind faith so many other investors place in AAPL. I haven't seen a company yet that deserves blind faith. AAPL had a great run and for all I know may be able to extend that great run for years. But not forever - that shouldn't be assumed by any shareholder. What I saw on u-tube seemed to me to be a business mistake.
    28 May, 10:57 AM Reply Like
  • Hank890
    , contributor
    Comments (676) | Send Message
     
    It is not the headphone business, per se, but the headphone as a wearable computer,...
    28 May, 11:45 AM Reply Like
  • DanoX
    , contributor
    Comments (2577) | Send Message
     
    Apple certainly doesn't. Compare to HP, Microsoft, or Google its not even close.

     

    http://bit.ly/HWpSDa
    28 May, 01:52 PM Reply Like
  • DanoX
    , contributor
    Comments (2577) | Send Message
     
    Are sure it wasn't the music or the tan?
    28 May, 01:53 PM Reply Like
  • scott trader
    , contributor
    Comments (4511) | Send Message
     
    Oh now the headphones are a wearable computer....where is the link?
    28 May, 11:51 PM Reply Like
  • tiger8896
    , contributor
    Comments (574) | Send Message
     
    200M isn't enough of a discount. Just because you're the richest guy in the neighborhood doesn't mean you should be paying twice what that house for sale is worth, 2B tops for Beats.
    28 May, 11:18 AM Reply Like
  • aryaputhra
    , contributor
    Comment (1) | Send Message
     
    3 billion for speakers? Insane.
    28 May, 11:39 AM Reply Like
  • DanoX
    , contributor
    Comments (2577) | Send Message
     
    The streaming software MOG/Beats music works better than the streaming radio software added on to iTunes in recent times. Beats isn't that bad.

     

    https://mog.com
    https://mog.com/#!what
    28 May, 01:54 PM Reply Like
  • scott trader
    , contributor
    Comments (4511) | Send Message
     
    2.5 billion for headpphones and speakers 500,000 for streaming service it is repoorted.....so who is ignorant..
    29 May, 09:25 PM Reply Like
  • Matthew Davis
    , contributor
    Comments (3666) | Send Message
     
    As much as I dislike this deal, 3B is nothing compared to 19B for a chat app or 8B for Skype. That music service number really stinks, so it makes me question further the motivation for buying this brand. It's low quality high margin paying for a name. Once they buy it out, the name ceases to be associated with it.
    28 May, 12:21 PM Reply Like
  • scott trader
    , contributor
    Comments (4511) | Send Message
     
    I give apple the benefit of the doubt on many things they do or not do , but I am having a hard time seeing the logic in this aquisition...uncharact... as I and others above have stated ...their engineers could come up with as good as hardware, or just purchase monster who built beats.headphones..

     

    .the ear buds are horrible as they do not stay in my ears.....but then I do not like large headphones....but then again I am not a teenager anymore.. That being said.....Listening to.Led Zeppelins and Santanas first album on headphones when ithey debuted was a near religious experience... That was then this is now...maybe the youth of today are experiencing similar feelings from the bass heavy boom boom hip hop stuff......there is a saying ...if it is too loud you are too old!
    28 May, 12:22 PM Reply Like
  • DanoX
    , contributor
    Comments (2577) | Send Message
     
    I listen to Led Zeppelin today (but I didn't when I was younger music is very much segregated in America Hmm...) I also listen A Perfect Circle and Living Colour, but it's a different world, Beats has 50 % of the market and appears to make a good profit. First glance I don't see it but the Mog software is better in many ways to the new streaming radio part recently added to iTunes.

     

    https://mog.com
    https://mog.com/#!what

     

    Long AKG K240 DF (less bass) Sony MDR V-900 (more bass)
    28 May, 02:12 PM Reply Like
  • investacentre
    , contributor
    Comment (1) | Send Message
     
    They aren't buying speakers people.. I'm amazed people on here actually invest their money. So much ignorance.
    28 May, 12:38 PM Reply Like
  • Hank890
    , contributor
    Comments (676) | Send Message
     
    Yeah, the magnitude of the ignorance in some of these comments is simply breath-taking. The deal is NOT about headphones, folks.
    28 May, 01:57 PM Reply Like
  • khoa_van
    , contributor
    Comments (33) | Send Message
     
    I agree - it's not the just speakers that Apple is buying folks
    28 May, 02:52 PM Reply Like
  • scott trader
    , contributor
    Comments (4511) | Send Message
     
    Ok Einstein great first comment....
    28 May, 11:47 PM Reply Like
  • gelstretch
    , contributor
    Comments (811) | Send Message
     
    A acquisition cost of 2.3x sales of a product line that is exhibiting very high margins proves to me Apple has some very clever management.

     

    I can assure you the strategic benefits of this deal far exceed the profit expectations of the products in the Beats line, and it will become very apparent soon after the deal is closed.
    28 May, 01:04 PM Reply Like
  • Dantes_Will
    , contributor
    Comments (323) | Send Message
     
    Google paid over 11x sales for NEST.

     

    NEST' most bullish estimates are around 300MM in rev, most estimates are in the 270MM range. Beats is already earning 5 times that amount.

     

    Definitely a huge win for Cook.
    28 May, 02:57 PM Reply Like
  • Ron Myers
    , contributor
    Comments (254) | Send Message
     
    If revs were really 1.3 B this was a great deal for Apple, wow.
    28 May, 01:33 PM Reply Like
  • Deja Vu
    , contributor
    Comments (1148) | Send Message
     
    Did anyone watch the full video by Dr. Dre? There was some Crip Walking at the end. Is this what Apple wants, association with gangsters? Good luck to that premium brand image. It's going to need it.
    28 May, 02:15 PM Reply Like
  • Mark Krieger
    , contributor
    Comments (3765) | Send Message
     
    why spend $3 b on a headphones mfg. anyways? Seems like a real folly to me. IS Dr. Dre a real doctor?
    28 May, 03:43 PM Reply Like
  • rogozienski
    , contributor
    Comments (7) | Send Message
     
    Yes, he received his doctorate in hard knocks at the south central school of life during the eighties.
    28 May, 07:29 PM Reply Like
  • dgulick
    , contributor
    Comments (1348) | Send Message
     
    "$200M offer price cut due to the Beats streaming music flop (only 111k subscribers)."

     

    What price will Google (and/or Amazon, Microsoft, Facebook) put on Spotify (40M users, 10M subscribers) or Pandora (250M users, 76M active last month at 23 hrs/ea)?
    28 May, 05:34 PM Reply Like
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