Perhaps Dr. Dre won't be anywhere near earning a billion dollars after all.
A new rumor about the supposed $3.2 billion acquisition of Andre Young and Jimmy Iovine's Beats Electronics by Apple has surfaced, this time saying Apple has cut back its proposed price by $200 million.
The New York Post cites a person "close to the talks" who said Apple wants to continue the acquisition and is planning to announce its plans this week, although the iPhone maker has reportedly reduced the price to $3 billion.
"Apple hadn't even begun its due diligence process when news of the number came out," says the source. The rumored blockbuster acquisition was first announced on May 8 by the Financial Times.
The price cut was apparently because of a leaked report that Apple got hold of and says that Beats' music streaming service has only 111,000 users. In contrast, Spotify is the biggest streaming service provider in the U.S. with 10 million users.
Still, the New York Post's source says Apple is not planning on building upon Beats Music, but it places a high value on Beats' hardware business. Beats is known for its high-priced headphones, with the higher-end models costing up to $450, and speakers which are popular as a fashion accessory. The headphones reportedly earned $1.3 billion in sales in 2013.
"Apple doesn't have a streaming music business so it would be a nice instant get, but the hardware is the profitable business," tips the source.
Other rumors have cropped up in the past, with one of the latest suggesting that the Beats acquisition is more of an acqui-hire. Apple reportedly was not as interested in Beats' headphones or streaming service as it wanted founders Iovine and Dr. Dre on the executive board. Iovine, a legendary producer responsible for producing music from the likes of Bruce Springsteen and Eminem, was said to serve as a "special advisor" to Apple executive Tim Cook. The rumor also said the Beats team would report directly to Cook.
Less than 24 hours after the Financial Times report, a video of a drunk Dr. Dre and friends celebrating "hip hop's first billionaire" made the rounds of the Internet. It has been deleted since then.
However, if the latest rumor is true, Dr. Dre, who owns 25% of Beats, won't be making 10 figures from the acquisition, although he and Iovine will still make a pre-tax fortune of hundreds of millions of dollars from the Beats sale to Apple.
