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Technology Stocks : Apple Inc.
AAPL 278.28+0.1%Dec 12 9:30 AM EST
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From: Since19985/29/2014 12:16:43 AM
   of 213176
 
Apple gets a highly profitable company with almost a billion in annual revenues. A fair valuation just for that company is probably the reason for the $3 billion price tag. Due diligence surely involved a close examination of Beats' books. The deal should improve profitability and cash flow because the return Apple is getting on its cash is so low right now. An added bonus is that Apple can use overseas cash to complete the deal without tax consequences.

Iovine gets a big payout and gets to work for Apple on reshaping the music industry. He is now the most powerful man in music.

Dre gets a big payout and can focus on making music. He's "the first hip-hop billionaire," and will continue doing promotional work for Beats and Apple when it's desired.

Carlisle Group gets a quick profit on their $500 million investment.

Synergies (Beats becomes more profitable as part of Apple):

Beats Music taps directly into the iTunes store and customer base and should be able to grow much more rapidly as a result of this position.

Beats headphones benefit from Apple's marketing muscle. The product line expands to speakers (and complete sound systems?) and is sold more prominently by Apple online and retail stores. Technology is shared across both companies to improve product quality and profitability.
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