What Would Apple Want with a Headphones Company?
Apple announced today that it is acquiring Beats for approximately $3 billion in cash and equity. The vast majority of the technology pundits have spent the past two weeks (since the news that Apple and Beats were negotiating leaked) writing that the acquisition was a dumb idea. All they did, in my opinion, was show how little pundits actually know about business.
Earlier in my life, I was a VP of Business Development at a publicly traded company. My job was looking for and making acquisitions that would turn our cash into a faster-growing company. The Beats acquisition is, in my opinion, an easy acquisition to approve. The company pays for itself within three years with the cash flow from its headphones business (so the financial risk is low) and the music streaming business might re-invigorate iTunes Radio, which has been a market flop (so the potential upside is high).
With the cash available that Apple has, I would have made that deal 10 out of 10 times.
BGR.com has obtained and published the memo that Tim Cook sent to Apple employees announcing the acquisition and explaining why he decided to buy Beats. It is here: Why Apple Bought Beats.