Apple CEO Tim Cook Confirms Beats Acquisition, Sends Memo to Employees as Firm Enters 'New Chapter'
By Reissa Su | May 29, 2014 8:59 PM EST
Apple Inc. has finally confirmed it was buying out Beats Electronics for $3 billion after deal rumors began circulating in recent weeks.
Apple Inc CEO Tim Cook speaks about the new iPad Air during an Apple event in San Francisco, California Oct. 22, 2013.
Soon after Apple's announcement, CEO Tim Cook drafted a memo to the employees. In the note, Cook cited Apple's history in music at the time of Steve Jobs who sold Macs to musicians and launched iTunes music store.
Cook raved about Beat Music and called it the "first subscription service to really get it right." The Apple CEO's memo was first read in 9to5Mac.
The CEO said bringing Apple and Beats together will lead to "amazing developments" that Apple's customers will love. Apple believes in the relevance of music to life.
He added music has a special place in Apple and it is for this reason that the company continues to invest in music to create "the most innovative music products and services in the world."
Cook formally informed Apple employees that Beats co-founders, Jimmy Iovine and Dr. Dre, will be joining the company, including their staff.
He said the Beats team will report to Eddy Cue, Apple's executive in charge of Internet services. Cook wrote both teams are excited about the possibilities of the future. He urged employees to join him in welcoming Beats into the Apple culture as the company enters a "new chapter in our history."
Brian White from Cantor Fitzgerald believes in Beats proprietary algorithms will offer customers suitable music to match their mood. White said they think this feature may be applied to movies and other media that Apple may provide. The analyst maintains a "Buy" rating on Apple stock with a price target of $777.
Piper Jaffray Analyst Gene Munster, who still endorses a "Buy" rating for Apple stock, said the Apple-Beats deal is a "bad idea."
He added he was having difficulty seeing the rationale of the deal. He noted although acquiring Beats will be giving Apple a "world class brand" in music, the tech giant already has a globally recognized brand to begin with.
As Apple's Worlwide Developers Conference event draws near, the iPhone maker might reveal more details about its plans for Beats and its role in the company's future.
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