AppleInsider Staff
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.
Wesley Hilliard
Andrew Orr
Amber Neely
William Gallagher
59 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! ( /s )
Actually, I fully expect Apple to make their money back and then some with thier purchase.
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.