Apple spent $3 million on Lala, not $80 million

Hammacher Homepage 300x250“$80 million for LaLa? That isn’t what we’re hearing,” Michael Arrington reports for TechCrunch.

“LaLa was purchased for $17 million by Apple, according to our sources with indirect knowledge of the deal,” Arrington reports. “And the company supposedly had $14 million in cash in the bank, meaning the actual purchase price was really $3 million.”

Arrington reports, “That’s in line with recent competitive sales like iLike ($20 million) and iMeem ($1 million). LaLa had plenty of cash in the bank, but they were burning $500k/month, say our sources. There’s just no reason Apple would pay $80 million for the company.”

“We also believe that LaLa was acquired mostly for the star engineering team and the awesome recent Google deal more than for the product. iTunes in the cloud isn’t something we should hold our breath for,” Arrington reports. “$3 million for top-of Google music results and a top team of engineers makes a lot of sense.”

Read more in the full article here.

27 Comments

  1. @ urlow

    Apple pays $17 million and that is for all of Lala including it’s $14 Million cash in the Bank, The net buying cost for Apple is $3 Million +/- a few hundred thousand. As once Apple and Lala seal the deal and control of Lala is handed over to Apple, Apple takes control of the company’s money and other assets along with all the companies liabilities. So, the net effect is about a $3 Million cost to buy Lala for Apple.

  2. it’s amazing that people still believe and give credence to today’s yellow green (as in puke) writers and the incredible from the cuff shit they write.

    It’s even more amazing that people don’t hesitate to invest money based on this crap.

    Gossip and innuendo, distort and short etc… used to be National Enquirer fodder – today that’s what the mainstream is …shallow and mediocre at best. Idiots.

  3. @TowerTone: it depends on how they raised the money. Venture capitalists write contracts to protect their interests; typically, they’ll state that if the company is acquired, they get paid back first from the proceeds. If the proceeds don’t cover their investment, then they lose money. That’s why there is lots of risk associated with venture capital. So, the company raised 35 million. Their sale price was 20. The VCs are paid back, on average, a bit more than half their investment. Apple takes over, withdraws $17M from the bank, and is out a total of $3M for the company, its intellectual property, and its contractual rights and obligations.

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