With Apple's acquisition of Beats Electronics, you would think Apple had purchased Comcast or Exxon Mobile. "Beats is Apple's biggest acquisition ever", rave the media. Apple's $3 billion purchase was good for Apple's brand and future opportunity, but sorry hype machine, it is a nearly irrelevant financial acquisition for Apple.
$3 billion is evidently the final price tag Apple and Beats settled upon. The multi-billion mark is certainly a nice payday for Jimmy Lovine and Dr. Dre, but the dollar figure is relative, and should only be viewed as a big or small figure based on the company it's coming from.
Apple generated $10.2 billion in quarterly net profit during the 2014 March quarter. Looking at the impact of this $3 billion acquisition, it takes Apple a mere 22 days to generate that much cash. Apple has also accrued over $140 billion in cash, thus $3 billion represents 2% of Apple's entire reserves. Peanuts.
Many are claiming Apple is spending far too large an amount of money on Beats Electronics, which couldn't be more false. The amount Apple is spending is relative to how large Apple is, and for Tim Cook, he probably found the money in his petty cash drawer. The fact is, Apple's payout for Lovine and company represents a nearly meaningless financial risk, but the payoff for just the brand alone is already proving to be huge.
- Three Mystery Programs Burying Apple
- WWDC's Missing Hardware Signals a Fall Tsunami
- Decoding Apple's WWDC 2016 Press Invitation
- Has Apple Lost Its Way?
- Why Apple Should Bundle Wireless Beats "EarPods" with iPhone 7
- iPhone SE is Apple's Trojan Horse
- OS X - Active or Inactive?
- Apple's Mac lineup in languishing – Is a massive re-invention near?
- MotorTrend Got One thing Right About Apple Car – Maybe
- Apple's Target is Set – Tesla's Model 3