A World Cup Snub Versus Cupertino Coolness: Apple and Beats Make First Goal

The $3 billion Apple reportedly spent on Beats is starting to pay off. And like we said when the Apple and Beats deal broke, the TMT sector is hot.

23 June 2014


Clearly, only fools think they can outguess the Colossus of Cupertino.

Already, the $3 billion Apple reportedly spent on Beats Electronics is starting to pay off, albeit intangibly. How do we know? Just imagine being officially banned from the World Cup — because that’s exactly what FIFA did to the Beats headsets, as a CBS story notes.

The reason: FIFA has a licensing agreement with  Sony. However, some athletes, off the clock, are sporting their Beats ears in camera view. Presumably, the much-coveted authority-hating millennial buying audience will eat this little fashion rebellion up: It highlights the coolness of Beats.

Regaining Apple mojo

Forget the allegedly good, but pricey Beats audio technology. Forget the measly 110,000 subscribers to the Beats streaming radio client list. Really, as this FIFA incident illustrates, Beats can quickly provide some heavy duty air conditioning: It’s making Apple cool again. After all, there’ve been unkind whispers the current Apple management team lacks the innovative vision of the Jobs era, etc.

Well, over time, this deal may dispel that.

TMT sector TNT charged

As we recently pointed out, many companies are now flush with cash — and some of those, including Apple, are putting this mammon to work. Firms looking to complete a strategic transaction want to do so now and benefit from the recovering economy, as Intralinks’ own Deal Flow Indicator (DFI) has noted. And the technology, media and telecommunications (TMT) sector is way hot, as we mentioned when the Beats deal broke. In fact, according to the Intralinks DFI, five of the 10 biggest deals of Q1 2014 were in TMT.

Facebook, Google and Comcast have been trying to scoop up brands to acquire trendy technologies or new customers. So, it’s no jaw dropper that Apple has grabbed its surfboard and caught the TMT wave. And given the tech giant sits atop a $160 billion treasure chest, the few shekels it plunked down won’t be overly missed — even if the Beats deal somehow becomes a flop. After all, it’s already put the words “cool” and “Apple” in the same sentence again.

Do loose lips sink valuations?

One other item worth contemplating — and it’s admittedly speculative — the original amount of the acquisition was $3.2 billion, according to the Financial Times article that broke the initial deal news. The final price tag was a reported $3 billion. Was this perhaps the result of Dr. Dre’s video boasting that he’d become the first hip-hop billionaire?

“At this high level of an M&A, it always has to be quiet — no one’s allowed to talk about it,” one venture capitalist told Fox Business. “The video probably hurt a bit.”

Well, along those lines, Intralinks’ research indicates that leaking deal info is risky. In fact, over the past two years, leaked deals were 9 percent less likely to complete than deals that remained secret.

In any case, even if Dr. Dre didn’t break the billionaire barrier, I’d bet my last bitcoin he’s now pretty dang rich.