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Apple: Please Leave the Beats to Dr. Dre
Apple is rumored to be acquiring Beats Electronics.
Michael Comeau    

This article was originally posted on the Buzz & Banter where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MVPRO+.

The Financial Times is reporting that Apple (NASDAQ:AAPL) is in talks to purchase Beats Electronics for $3.2 billion, its biggest acquisition ever. Beats has two business lines -- a consumer electronics unit focused on headphones and speakers, and a streaming music service called Beats Music.

I just don't see what Apple gets out of this.

Apple is already great at making hardware. Does anyone really think Apple couldn't make an amazing set of premium headphones or a great Bluetooth speaker if it so wished? Smaller companies such as Logitech (NASDAQ:LOGI) and Harman (NYSE:HAR) do a fantastic job with these types of products, so why couldn't Apple?

And, to an extent, Apple already benefits from the popularity of Beats headphones and speakers by selling them in Apple Stores, which means they can be quickly dumped if they fall out of favor with consumers.

Now there is some merit to Apple getting into streaming music. We're clearly moving toward a streaming model, as evidenced by the stagnation of song download sales amid the growing popularity of services like Pandora (NYSE:P) and Spotify. Apple hasn't been completely blind to this. After all, it created iTunes Radio, allowing it to get its feet wet in streaming music.

But a high-profile acquisition like Beats would officially throw iTunes under the bus. According to industry estimates, Beats Music has about 200,000 subscribers, many of whom are coming from a free trial from AT&T (NYSE:T). Backing from Apple would grow that number, but the same money and energy could be used to push iTunes Radio.

If Apple is going to make a big splash into streaming, I'd much rather see it go straight for Spotify, which has over 24 million active users and over 6 million paying subscribers. With more than $150 billion in cash, money's clearly not an issue.

I'd guess there's maybe a 25% chance Apple actually buys Beats. I certainly don't want it to happen. Beats has a strong, growing brand, but it does nothing Apple can't do itself. Beats by Dre is good enough. We don't need Beats by Tim Cook.

Pandora, Logitech, and Harman are all indicated lower in early trading. Depending upon the broader market action, I wouldn't be surprised to see them bounce back.

Twitter: @MichaelComeau

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
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Position in AAPL
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Apple: Please Leave the Beats to Dr. Dre
Apple is rumored to be acquiring Beats Electronics.
Michael Comeau    

This article was originally posted on the Buzz & Banter where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MVPRO+.

The Financial Times is reporting that Apple (NASDAQ:AAPL) is in talks to purchase Beats Electronics for $3.2 billion, its biggest acquisition ever. Beats has two business lines -- a consumer electronics unit focused on headphones and speakers, and a streaming music service called Beats Music.

I just don't see what Apple gets out of this.

Apple is already great at making hardware. Does anyone really think Apple couldn't make an amazing set of premium headphones or a great Bluetooth speaker if it so wished? Smaller companies such as Logitech (NASDAQ:LOGI) and Harman (NYSE:HAR) do a fantastic job with these types of products, so why couldn't Apple?

And, to an extent, Apple already benefits from the popularity of Beats headphones and speakers by selling them in Apple Stores, which means they can be quickly dumped if they fall out of favor with consumers.

Now there is some merit to Apple getting into streaming music. We're clearly moving toward a streaming model, as evidenced by the stagnation of song download sales amid the growing popularity of services like Pandora (NYSE:P) and Spotify. Apple hasn't been completely blind to this. After all, it created iTunes Radio, allowing it to get its feet wet in streaming music.

But a high-profile acquisition like Beats would officially throw iTunes under the bus. According to industry estimates, Beats Music has about 200,000 subscribers, many of whom are coming from a free trial from AT&T (NYSE:T). Backing from Apple would grow that number, but the same money and energy could be used to push iTunes Radio.

If Apple is going to make a big splash into streaming, I'd much rather see it go straight for Spotify, which has over 24 million active users and over 6 million paying subscribers. With more than $150 billion in cash, money's clearly not an issue.

I'd guess there's maybe a 25% chance Apple actually buys Beats. I certainly don't want it to happen. Beats has a strong, growing brand, but it does nothing Apple can't do itself. Beats by Dre is good enough. We don't need Beats by Tim Cook.

Pandora, Logitech, and Harman are all indicated lower in early trading. Depending upon the broader market action, I wouldn't be surprised to see them bounce back.

Twitter: @MichaelComeau

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
< Previous
  • 1
Next >
Position in AAPL
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
More From Michael Comeau
Apple: Please Leave the Beats to Dr. Dre
Apple is rumored to be acquiring Beats Electronics.
Michael Comeau    

This article was originally posted on the Buzz & Banter where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MVPRO+.

The Financial Times is reporting that Apple (NASDAQ:AAPL) is in talks to purchase Beats Electronics for $3.2 billion, its biggest acquisition ever. Beats has two business lines -- a consumer electronics unit focused on headphones and speakers, and a streaming music service called Beats Music.

I just don't see what Apple gets out of this.

Apple is already great at making hardware. Does anyone really think Apple couldn't make an amazing set of premium headphones or a great Bluetooth speaker if it so wished? Smaller companies such as Logitech (NASDAQ:LOGI) and Harman (NYSE:HAR) do a fantastic job with these types of products, so why couldn't Apple?

And, to an extent, Apple already benefits from the popularity of Beats headphones and speakers by selling them in Apple Stores, which means they can be quickly dumped if they fall out of favor with consumers.

Now there is some merit to Apple getting into streaming music. We're clearly moving toward a streaming model, as evidenced by the stagnation of song download sales amid the growing popularity of services like Pandora (NYSE:P) and Spotify. Apple hasn't been completely blind to this. After all, it created iTunes Radio, allowing it to get its feet wet in streaming music.

But a high-profile acquisition like Beats would officially throw iTunes under the bus. According to industry estimates, Beats Music has about 200,000 subscribers, many of whom are coming from a free trial from AT&T (NYSE:T). Backing from Apple would grow that number, but the same money and energy could be used to push iTunes Radio.

If Apple is going to make a big splash into streaming, I'd much rather see it go straight for Spotify, which has over 24 million active users and over 6 million paying subscribers. With more than $150 billion in cash, money's clearly not an issue.

I'd guess there's maybe a 25% chance Apple actually buys Beats. I certainly don't want it to happen. Beats has a strong, growing brand, but it does nothing Apple can't do itself. Beats by Dre is good enough. We don't need Beats by Tim Cook.

Pandora, Logitech, and Harman are all indicated lower in early trading. Depending upon the broader market action, I wouldn't be surprised to see them bounce back.

Twitter: @MichaelComeau

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
< Previous
  • 1
Next >
Position in AAPL
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
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