Ep 49: Beats by Apple
Nasir and Matt kick off the week discussing Apple's acquisition of Beats and whether it was a smart purchase. They then answer the question, "Should I give some of my employees a corporate credit card?" Full Podcast Transcript NASIR: Welcome to Legally Sound Smart Business. This is Nasir Pasha. MATT: And this is Matt Staub. NASIR: And this is our podcast where we cover business in the news with our business legal twist and also answer some of your business legal questions that you can send at ask@legallysoundsmartbusiness.com and dot-pizza when that comes. MATT: I think we’ve said that enough now, I don’t know. The joke might be… NASIR: No, it’s not a joke. I just want to get used to saying it when we do get it. MATT: At some point, I guess one of us is actually going to have to look up if that’s even going to become a thing. NASIR: No, it is. I think you thought I was joking these past few episodes but I’ve been looking it up. I don’t know the exact date that it’s coming out. Like you said, you can pre-register them right now but dot-pizza is coming and it’s coming to a podcast near you. MATT: I’m just skeptical and this is actually a very nice tie-in to our story here because it’s about something that you never think will happen but you just keep hearing about it and the hype is all there. Of course, I’m talking about Dr. Dre’s most recent album that was supposed to come out every day for the last ten years and hasn’t. You see the tie-in there? This is nice because we’re talking about Beats by Dre, how they just got bought. It’s official now. The story came out a couple of weeks ago but Apple just purchased Beats by Dre, Beats Electronics I think is the actual name – Beats, whatever you want to call it – Beats Audio Hardware, Beats Music. Three-billion-dollar purchase; 2.6 billion in cash, 400 million in stock. The price tag is one thing that’s really interesting but Apple is really not known for buying well-known companies – at least well-known to the general public. So, this seems like a different type of acquisition for them as opposed to their normal “We’re just going to buy up technology companies that are doing really well, something we really like” especially because, from what I can tell, Apple has a lot of these things already in place. It’s a different type of acquisition, I think. NASIR: It is interesting because their headphones are pretty iconic. In fact, I would say some people would argue that the Apple headphones beats Beats. How’d you like that? I just kept thinking about that episode of The Office where I think Jim’s making fun of Dwight saying, “Beats beats Battlestar Galactica or something like that. MATT: Different type of Beats. NASIR: Different type of beats. Nonetheless, I think people are confused by the acquisition as well because it’s not normal. But I started looking more into this story. What’s interesting is that, in the inception of this Beats concept where this guy named Lamar – I think that’s his last name – he actually came up with the concept, “Okay, let’s design headphones that are backed by some kind of celebrity,” and got up and started talking with Dr. Dre and so forth and went to this designer that the owner or partner was actually a former designer of Apple. Because of that, very early – this was back in 2006 even – there was some contact between the Apple Retail VP and this company and there were some lawsuits regarding that with this design company later on that’s kind of irrelevant to that but what’s interesting is that, back in 2006, Apple was in contact with this company and here we are a number of years later where Apple is buying them for three billion dollars. MATT: Yeah, and I mentioned the price. A lot of people have been talking about that. They think it’s outrageous. I looked a little bit more into the numbers. The cash reserves of Beats is 150 billion. Keep in mind the purchase price was three billion and then the estimated annual sales of Beats last yea...
