By James Santagata
Principal Consultant, SiliconEdge
With Apple's rumored acquisition of Beats Electronics for up to $3.2 billion USD it begs the multi-part question:
Is this something that Steve Jobs would have done during his tenure, is this good for Apple or does it suggest that Tim Cook is simply a corporate lackey?
Looking at the M&A transaction history for Apple, even when adjusted for inflation, we see that Apple has never made an acquisition approaching this size, not even the acquisition of Next Computer.
Why is this?
Well, for one, Steve Jobs had massive business acumen, he apparently understood that in these large acquisitions there are two main risks.
First, is the integration risk of corporate cultures.
Second is the fact that in many cases companies are just paying for goodwill that never existed or quickly evaporates once the acquisition is completed.
$500 million USD is a good chunk of change. $3.2 billion USD is even larger. With that kind of money, a stud like Steve Jobs could have built something from scratch and then owned the market.
Evidently, Tim Cook can't create or drive organic growth; he seemingly can only acquire and focus on accretive growth.
Nothing wrong with that, if it works and that's Apple's new "strategy" but it would be a massive departure from Apple under Steve Jobs since firms like Google and Microsoft are the ones who buy billion dollar businesses; Steve Jobs is the one who creates them.
And what exactly makes Beats Electronics so valuable to Apple? This reader comment found on the Register website didn't seem to think there was much there:
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