News / Economy

Source: Apple Close to Buying Beats Electronics

FILE - The Apple logo is projected during an announcement in San Francisco.
FILE - The Apple logo is projected during an announcement in San Francisco.
Reuters
Apple Inc. is close to paying a record $3.2 billion for Beats Electronics, two people with knowledge of the matter said, an expensive foray into music streaming and headphone gear that would mark a departure for the usually cash-conservative iPhone maker.
 
Both companies are hashing out details and the envisioned deal could still fall through, one person told Reuters on condition of anonymity because the discussions were private.
 
A second source familiar with the matter told Reuters that Apple was in the market for a subscription-based music service to complement its “iRadio” ad-based offering, launched in 2013 as part of an attempt to jump into a music-streaming arena then split between a handful of startups such as Pandora Inc.
 
Founded by rapper Dr. Dre and legendary music producer Jimmy Iovine, Beats Electronics is best known for its “Beats by Dr Dre” line of trendy headphones that vie with the likes of Skullcandy Inc, Sennheiser Electronic and Bose Corp. This year, it launched a music service that has won plaudits for its slick design and human music curation, versus the computer-algorithms that determine playlists for most of its rivals.
 
But analysts on Thursday questioned whether Beats, valued at just $1 billion during its last funding round in September, was worth that price. Apple had more than $130 billion in cash as of the end of March, but the vast majority of that is parked abroad and investors have called on the company to return more cash in the form of dividends and buybacks.
 
Apple-watchers have speculated that the company that upended the music industry - and today is the single largest seller of tunes - was contemplating a Spotify-like on-demand music service to go with iRadio service and iTunes.
 
“This is really puzzling,” said Forrester analyst James McQuivey, who said there was huge overlap between the two companies' customer base. “You buy companies today to get technologies that no one else or customers that no one has.”
 
“They must have something hidden under the hood,” he said.
 
In two of the largest deals this year, Facebook paid $19 billion for WhatsApp and its half-billion users, and it paid $2 billion for Oculus VR and its cutting-edge virtual reality headset.
 
Apple declined to comment on the report. Beats Electronics did not respond to requests for comment on the news, which was reported first by the Financial Times.
 
Under pressure?
 
Apple has not made a billion-dollar acquisition in at least a decade. The company prefers to develop and design its products in-house, though it has tended to pay several hundred million dollars for small but important bits of technology to propel its core consumer electronics business, such as the acquisition of PA Semi in 2008 that led to the processor now found in all iPhones.
 
The company has been under pressure to try to revitalize growth as iPhone sales slow in a rapidly maturing market. Critics have also accused the company of slowly “losing its cool” and innovative edge to new and upcoming technology companies, and missing the music-streaming bandwagon.
 
Technology giants Google and Amazon began jockeying for position in music last year, looking at ways to make streaming profitable and to develop a service seen as crucial to retaining users in an increasingly mobile environment. For Google and Apple especially, the endeavor was critical to ensure users remain loyal to their mobile products.
 
They realized they had to stake out a place or risk ceding control of one of the largest components of mobile device usage. Analysts estimate roughly half of smartphone users listen to music on their device, making it the fourth most popular media-related activity after social networking, games and news.
 
Apple launched its own streaming music service last year, hoping to jump into the fast-expanding arena as growth of its iTunes service falters.
 
Apple's Chief Executive Tim Cook met with Iovine, the Beats CEO, last year on a potential partnership involving Beats's planned music-streaming service, Reuters reported in March, citing sources.
 
Dre - who guided the careers of a string of rap artists such as Eminem and 50 Cent - compared his company with Apple in 2011.
 
“We're trying to eventually be second to Apple. And I don't think that's a bad position,” Dre told The Fader music website.
 
Beats Electronics received a $500 million investment from Carlyle Group in September that valued the company at over $1 billion. It also bought back in September a 24.84 percent stake held by Taiwan smartphone maker HTC Corp , which once held as much as 50.1 percent of the company.

You May Like

US Investors Eye IPO for China's Alibaba

E-commerce giant handled 80 percent of China's online business last year, logging more Internet transactions than US-based Amazon.com and eBay combined More

Video Uneasy Calm Settles Over Israel, Gaza Strip

As cease-fire begins, Palestinians celebrate in streets; Israelis remain wary More

Video Chinese Doctors Use 3-D Spinal Implant

In treatment of a 12-year-old boy Chinese doctors used a 3-D printer and special software to create an exact replica of vertebra More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Chinese Doctors Use 3-D Spinal Implanti
X
August 27, 2014 4:53 PM
A Chinese boy suffering from a debilitating bone disease has become the first patient with a part of his spine created in a three-dimensional printer. Doctors say he will soon regain normal mobility. VOA’s George Putic reports.
Video

Video Chinese Doctors Use 3-D Spinal Implant

A Chinese boy suffering from a debilitating bone disease has become the first patient with a part of his spine created in a three-dimensional printer. Doctors say he will soon regain normal mobility. VOA’s George Putic reports.
Video

Video Uneasy Calm Settles Over Israel, Gaza Strip

Israel and the Gaza Strip have been calm since a cease-fire set in Tuesday evening, ending seven weeks of hostilities. Hamas, which controls Gaza, declared victory. Israelis were more wart. VOA’s Scott Bobb reports from Jerusalem.
Video

Video India’s Leprosy Battle Stymied by Continuing Stigma

Medical advancements in the treatment of leprosy have greatly diminished its impact around the world, largely eliminating the disease from most countries. India made great strides in combating leprosy, but still accounts for a majority of the world’s new cases each year, and the number of newly infected Indians is rising - more than 130,000 recorded last year. Doctors there say the problem has more to do with society than science. VOA News reports from Kolkata.
Video

Video Northern California Quake: No Way to Know When Next One Will Hit

A magnitude 6.0 earthquake rocked northern California’s Napa Valley on Sunday. Roads twisted and water mains burst. It was the wine country’s most severe quake in 15 years, and while hospitals treated many people, no one was killed. Arash Arabasadi has more from Washington on what the future may hold for those residents living on a fault line.
Video

Video Scientists Unlock Mystery of Bird Flocks

How can flocks of birds, schools of fish or herds of antelope suddenly change direction -- all the individuals adjusting their movement in concert, at seemingly the same time? British researchers now have some insights into this behavior, which has puzzled scientists for a long time. VOA's George Putic has more.
Video

Video Ukraine: Captured Troops Proof of Russian Role in Separatist Fight

Ukrainian officials say they have captured Russian soldiers on Ukrainian territory -- the latest accusation of Moscow's involvement in the conflict in eastern Ukraine. VOA's Gabe Joselow reports from the Ukrainian side of the battle, where soldiers are convinced of Russia's role.
Video

Video Rubber May Soon Come From Dandelions

Synthetic rubber has been around for more than a century, but quality tires for cars, trucks and aircraft still need up to 40 percent or more natural rubber content. As the source of natural rubber, the rubber tree, is prone to disease and can be affected by bad weather. So scientists are looking for replacements. And as VOA’s George Putic reports, they may have found one in a ubiquitous weed.
Video

Video Jewish Life in Argentina Reflected in Yiddish Tango

Jewish people from across Europe and Russia have been immigrating to Argentina for hundreds of years. They brought with them dance music that were eventually mixed with Argentine tango. The result is Yiddish tango -- a fusion of melodies and cultural experiences that is still evolving today. Elizabeth Lee reports from the Skirball Cultural Center in Los Angeles, where one band is bringing Yiddish tango to an American audience.

AppleAndroid

World Currencies

EUR
USD
0.7537
JPY
USD
103.79
GBP
USD
0.6032
CAD
USD
1.0957
INR
USD
60.522

Rates may not be current.