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Apple Confirms Its $3 Billion Deal for Beats Electronics

nytimes.com

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Re: Apple Confirms Its $3 Billion Deal for Beats Electronics

#331

Post by Chronic26 »

JumpCrisscross wrote: post #178
stcredzero wrote: post #174

Earlier quoted context omitted.

How did you arrive at the 15% margin figure?

($3 billion purchase price [1] / 14.9x AAPL P/E ratio [2]) / $1.3 billion 2013 Beats headphone sales [3]. We are asking how much in earnings (E) would Beats need to earn to give a $3 billion price (P) no more than a 14.9x P/E ratio. We then turn those minimum earnings E and turn them into a quick-and-dirty margin by dividing E by sales. [1] http://www.nytimes.com/2014/05/29/technology/apple-confirms-... [2] https://w…

Using Apple's P/E ratio with Beats sales assumes that the Beats headphone business is exactly the same (or very similar) as Apple's overall business, which is not the case. A comparables analysis would be more relevant.

Re: Apple Confirms Its $3 Billion Deal for Beats Electronics

#332

Post by xmonkee »

maxmcd wrote: post #289
chondos wrote: post #273

Earlier quoted context omitted.

He has learned to control his public image sure, but most of his lyrics of music that he has written, performed, and produced (even presently) seems very much misogynistic. Look, we've got stories all over about the #YesAllWomen phenomenon on twitter currently. All the women asking for equality and stating that they have been sexually harassed/abused/assaulted in some way. Now in this story we have someone who holds…

I would recommend including specific examples of lyrics if you're going to come down with a conclusive opinion on this one.

Man, I love Dre, but you really don't gotta look far for those kinda lyrics

"bitches ain't shit but hoes and tricks....", I mean cmon.

Re: Apple Confirms Its $3 Billion Deal for Beats Electronics

#333

Post by smegel »

redacted wrote: post #318
smegel wrote: post #208

Earlier quoted context omitted.

Sad this is the top comment in this page. Is feminism really the most important issue for a hacker community?

If this was reddit, that'd be called 'karmawhoring' - posting comments that play to the crowd while being tangentially related to the story, in order to get a big pile of internet points.

I get that juvenile Redditors find pictures of cats amusing - I find it less easy to grasp why a technical hacker/start up community is less interested in the technical/business aspects of a major tech deal than the somewhat unsurprising revelation that a famous rap artist said mean things about women (many years ago from what I [now unfortunately] understand).

Re: Apple Confirms Its $3 Billion Deal for Beats Electronics

#334

Post by michaelt »

saaaaaam wrote: post #276
JumpCrisscross wrote: post #23

The meat of this deal isn't likely the streaming service. Beats Music had only 111,000 subscribers as of March [1]. Compare that to Spotify's 10 million paying subscribers, 30 million non-paying users, and $4 billion valuation. The deal's financial logic is driven by Beats's $1.3 billion business (in 2013) of selling high-priced headphones. Given Apple's P/E ratio of 14.9x earnings [2], the acquisition would make sen…

Wow. Hold on. The meat of this deal is absolutely the streaming service. Apple NEEDS streaming. I buy an iPhone: I pay $100 to have ALL THE MUSIC ALL THE TIME with that phone, for the lifetime of the device. Awesome! It's like Amazon Prime but better. And Apple NEEDS that; for them to negotiate their own streaming service with the majors + merlin it would have cost them dear - probably some sort of huge advance or eq…

  For the headphones, Beats did $1.5bn in revenue last year.
  [...] Gosh. Check my maths there, because I thought it was
  insane too.
The only source I can find for the $1.5 billion figure is an article from July 2013 quoting an anonymous "knowledgeable source" [1].

On the other hand, an article from January 2014 quotes a marketing research company saying "Beats controls 27% of the $1.8 billion headphone market" [2] which is a drastically different claim.

Personally I take the words of anonymous sources and 'market analysts' with a big pinch of salt.

[1] http://www.fastcompany.com/3015051/major-beats-beats-electro... [2] http://edition.cnn.com/2014/01/13/tech/beats-headphones-audi...

Re: Apple Confirms Its $3 Billion Deal for Beats Electronics

#335

Post by Alphasite_ »

lstroud wrote: post #121

Will Beats be a wholly owned subsidiary or integrated into Apple? I would imagine corporate structure will provide the answers on why Apple made this decision.

The only subsidiary Apple has is Filemaker, and its very very hands off, so I imagine they're going to strip off anything of value and dump the rest.

Re: Apple Confirms Its $3 Billion Deal for Beats Electronics

#336

Post by smtddr »

eurleif wrote: post #293
smtddr wrote: post #288

Earlier quoted context omitted.

His beliefs could have actually changed. But I do agree, I don't want Eich, or anyone, to _lie_ about who they are or what they believe. If he really, truly feels the way he does he should stand by it and accept whatever happens... but if he truly regrets it, the way Donald Sterling does[1] (I hope) , then he could have stated that regret and all would probably be "forgiven" (scared to use this word implying someone…

>but if he truly regrets it, the way Donald Sterling does[1](I hope) Is this a joke, or did you not read the article you linked past the first clause of the headline?

...oh geez, didn't even comprehend that until I re-read it... failure on my part.

Re: Apple Confirms Its $3 Billion Deal for Beats Electronics

#337

Post by depr »

chondos wrote: post #273
IBM wrote: post #224

Earlier quoted context omitted.

That incident was 23 years ago and he did his time for it. He's also shown remorse for it and wishes it never happened.[0] He's a 49 year old man now and he's been married for 18 years. I think he's past that kind of stuff. [0] https://www.youtube.com/watch?v=btc1MflBSeQ&feature=youtu.be...

He has learned to control his public image sure, but most of his lyrics of music that he has written, performed, and produced (even presently) seems very much misogynistic. Look, we've got stories all over about the #YesAllWomen phenomenon on twitter currently. All the women asking for equality and stating that they have been sexually harassed/abused/assaulted in some way. Now in this story we have someone who holds…

"If people listen to rap music enough, they start to emulate the language, treatment and other thought patterns being drilled into their brains (it's voluntary brainwash/ thought programming really)."

If young people play shooter video games, they become killers!

Re: Apple Confirms Its $3 Billion Deal for Beats Electronics

#338

Post by josefresco »

abalone wrote: post #70

The most interesting reveal from Tim Cook's quote is that he only mentions the music service and the talent, not the headphones. That's super interesting. It basically means Apple looked at this like a typical Apple aquihire / component technology purchase (of the service), that just happened to have a multi-billion dollar profitable accessories business attached to it. That makes it a very unique kind of deal.

In other interviews (1) he actually mentions music first, then the talent, than the hardware business. Sounds more like PR story-telling than an actual assessment of why they made this move.

The music angle is touchy-feely, the talent angle makes it seem like Apple got something that's exclusive, and the profitable hardware business is the solid base to calm investors.

1 http://recode.net/2014/05/28/tim-cook-explains-why-apple-is-...

Re: Apple Confirms Its $3 Billion Deal for Beats Electronics

#339

Post by josefresco »

sscalia wrote: post #103
antr wrote: post #95

Earlier quoted context omitted.

For those of us not familiar with Beats, what is so special about the music service compared to (for argument sake) Spotify?

I used my trial of Beats Music for awhile -- I will admit, it had the BEST discovery and automatic playlist creation of any service I've ever used (Rdio, Spotify, Pandora, iTunes Radio) -- you really could be confident when you suggested a song it would build a list of songs that you weren't skipping. It also had a unique UI.

"I used my trial of Beats Music for awhile"

To be fair, Pandora for me was a magical wonderland of new music discovery for even the first 6-12 months of use. Now? Not so much, and I find myself often wishing Pandora was better at several things.

Re: Apple Confirms Its $3 Billion Deal for Beats Electronics

#340

Post by Smulv »

It's well established that Apple is one of the pioneers in the digital distribution of music; however, iTunes hasn't been keeping pace. The portion of Apple's online services revenue from iTunes has been steadily declining since Q1 of 2011 [1]. The Beats' headphones product is definitely profitable and responsible for a big chunk of that $3 billion valuation; however, I doubt that was Apple's main motivator.

It seems as if Apple is doing this to both acquire the talent involved as well as the Beats' streaming service. As mentioned in the article Apple usually prefers the smaller segmented purchases, so I'm guessing Beats approached negotiations with an all-in-one mindset. As to the why Beats instead of another streaming service, it has to be some combination of the talent being just that good or the Beats' streaming service has something that distinguishes itself from others. What that is I don't know. I've heard about their mood based playlist feature and find that pretty interesting. I would like to see what happens when the physiological effects of certain music genres are researched, and then applied to develop this mood playlist concept even further. Thoughts?

[1] http://www.macrumors.com/2014/05/28/beats-key-declining-itun...

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