“Nobody published as detailed — or as nasty — a look at Apple’s newest acquisition as the one Sam Hamadah’s PrivCo posted on Thursday,” Philip Elmer-DeWitt reports for Fortune. “According to PrivCo, Beats in June 2013 was only days away from default on hundreds of millions of dollars of debt, and was saved from bankruptcy with a short-term, high-interested note, due next month and secured by rights to all Beats assets, trademarks and equity.”
P.E.D. reports, “The report is unsigned, except for a summary quote from PrivCo founder and sometime movie producer Sam Hamadah: ‘After Beats took its manufacturing in-house in 2012 — turning Beats into a low-margin electronics maker — while at the same time buying back HTC’s stake in the company with $265 Million in borrowed money due within 12 months, by 2013 Beats Electronics was a distressed business by any standard. New lenders were balking at Beats’ plan to borrow more money to not just pay off its looming debts, but to pay Dre and Iovine a quarter-billion dividend to boot. The company was in a corner until Carlyle stepped in. And now Apple coming to the rescue as Dre’s and Beats’ final savior. As for the king’s ransom Apple is paying, no traditional valuation measure applied to Beats as a business justifies the price. Although even CEOs become star-struck, they shouldn’t ever become blind. We must assume Apple and Tim Cook have grand plans to which we’re not privy to.'”
Read more in the full article here.
[Thanks to MacDailyNews Reader “Arline M.” for the heads up.]
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