Apple's paid less than $500M for Beats Music, $2.5B for Beats Electronics
As part of its $3 billion acquisition of Beats, Apple is paying less than $500 million for the Beats Music streaming service and more than $2.5 billion for the firm's hardware arm, one report says.
Following Apple's announcement of a blockbuster $3 billion Beats buyout on Wednesday, The Wall Street Journal reports most of the money is going toward Beats Electronics, which is responsible for headphones, speakers and other audio equipment.
A source familiar with Beats' operations said the firm's sales totaled nearly $1.5 billion in 2013, all of which came from the hardware division as Beats Music launched in January of 2014. However, the amount allotted to Beats Music is perhaps more interesting considering its status as a fledgling streaming service with a relatively low subscribership.
Judging by Beats co-founder Jimmy Iovine's statement that Beats Music amassed 250,000 subscribers in three months, Apple is either overpaying or has bigger plans for the streaming service.
By comparison, competing streaming music provider Spotify recently raised $250 million on a valuation of $4 billion. With 10 million subscribers worldwide, the numbers represent roughly $400 per subscriber. Applying those same metrics to Beats Music, the soon-to-be Apple subsidiary is worth $100 million.
Following Apple's announcement of a blockbuster $3 billion Beats buyout on Wednesday, The Wall Street Journal reports most of the money is going toward Beats Electronics, which is responsible for headphones, speakers and other audio equipment.
A source familiar with Beats' operations said the firm's sales totaled nearly $1.5 billion in 2013, all of which came from the hardware division as Beats Music launched in January of 2014. However, the amount allotted to Beats Music is perhaps more interesting considering its status as a fledgling streaming service with a relatively low subscribership.
Judging by Beats co-founder Jimmy Iovine's statement that Beats Music amassed 250,000 subscribers in three months, Apple is either overpaying or has bigger plans for the streaming service.
By comparison, competing streaming music provider Spotify recently raised $250 million on a valuation of $4 billion. With 10 million subscribers worldwide, the numbers represent roughly $400 per subscriber. Applying those same metrics to Beats Music, the soon-to-be Apple subsidiary is worth $100 million.
Comments
Please surprise me Apple because so far I feel like this was a stupid deal
Any substantial material influence from this acquisition will likely take 18-24 months to register in Apple's financials.
Heck the deal isn't expected to close until Apple's fiscal Q4 (the quarter ending in September).
Come back in 2016.
Any substantial material influence from this acquisition will likely take 18-24 months to register in Apple's financials.
I expect most of these $3B will simply be written off in one of the future quarters.
I heard Beats headphones were overpriced, but this is ridiculous!
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Actually, I fully expect Apple to make their money back and then some with thier purchase.
I expect most of these $3B will simply be written off in one of the future quarters.
I'm talking about the impact of the Beats deal in generating profit for Apple.
The acquisition costs will likely be written off sometime in FY 2015, once the deal closes.
http://recode.net/2014/05/28/tim-cook-explains-why-apple-is-buying-beats-qa/
Fire Cook!
Please surprise me Apple because so far I feel like this was a stupid deal
I'm sure Apple did a shitload more research into Beats, and the reasons and benefits of acquisition, compared to how you "feel" about it. The Pros, Cons, everything. Maybe people should give Apple the benefit of the doubt (hasn't it earned at least that?) before jumping to judgement.
HAD!
Fire Cook!
Just once I'd like to see a post from you that deserves to exist. All you do is lower the level of discourse of any thread you enter into the sludge.
Oh, and who's gonna "fire" Cook? Do you think this deal was just him? Obviously ALOT of people at Apple had to be for it, for it to happen. You don't even have a shred of evidence that it was Cook's idea. Nor have you given a shred of evidence of why its a BAD deal, apart from your trolling drivel. Apple stock is through the roof.
The only way this information could get out would be an Apple leak. Who else would leak such information? Dre again? I kinda doubt he'd want to be known as the Apple board member who can't keep his mouth shut.
Where do you get board member? He gets to work for Apple, period.
I'm talking about the impact of the Beats deal in generating profit for Apple.
The acquisition costs will likely be written off sometime in FY 2015, once the deal closes.
I don't think "written off" means what you think it does.
Apple stock is through the roof, so maybe you're the short-sighted moron?
I have never written or believed that Tim Cook should be fired, so I'm not one of those people, but I don't think that it's a good idea to use Apple's current stock price to back up your argument, because anti-Apple trolls also like to use Apple's stock price as an argument when it is low, to "prove" how badly things are going for Apple. The stock price would be irrelevant in both cases, in my opinion.
Beats Electronics will be a prolific electronics company (hence the "pipeline" comment from Eddy Cue) and a design playground for Jony and his team to create Apple accessories without messing with the "Apple" brand and reputation. Expect a Beats phone, additional stereo speaker systems, headphones, and many other things…
Interesting coincidence that our friend Steve Ballmer just submitted a $2 billion for the LA Clippers. Not a great year to be a Clippers fan (if there are any).
Where do you get board member? He gets to work for Apple, period.
Iovine did say they will now be able to see Apple products in development, but it's true there is no confirmation that they will be on the board.
I don't think "written off" means what you think it does.
Fair enough, poor selection of wording on my part. The cost of the acquisition will be accounted for in FY 2015.