The big story from the business work this week was good ol’ Apple acquiring the Dr. Dre backed headphone company, Beats Audio. Apple is said to be on the verge of paying $3.2 billion to acquire the company, which is expected to become official next week. No word on whether Dr. Dre will continue to work for Apple, but I’m guessing not. I don’t know if you guys know this, but he’s not a real doctor.
Naturally, everyone who gives the internet their HOT TAKES chimed in and offered their opinion on the deal. So why not Nelly? That’s why you’re here, right? I’m being informed that all of you really just tried to get to BinancialSuproar instead, and you’re all just bad at the internet. Well.
I like the deal. Apparently audio type people think the headphones kinda suck compared to the other premium headphones out there. Beats’ headphones start at $99 a pair, and go up to a few hundred bucks. That’s a lot to pay for headphones, especially ones that suck.
But here’s the deal; the kids you see buying Beats headphones, they don’t know a thing about sound quality. As long as Dr. Dre’s headphones are better than the ones included with the iPhone, people will keep buying them as long as they continue to be cool. That’s the important part.
Compare these kids to people who drink wine. I can’t stand the stuff, but apparently most of you like it. Science type people have done studies and figured out that most people can’t tell the difference between good wine and the crappy stuff. They might as well just buy the cheap wine. It’s the same thing with headphones.
Apple has plenty of experience taking stuff that’s good and adding that cool factor to it. My iPhone isn’t any better than the comparable Samsung phone. Even Blackberry makes a decent product. Each phone has its own pros and cons, but ultimately it’s about marketing.
If Apple can sell headphones as well as it sells phones, it looks like a decent deal.
Time for links! These are all me, writing for The Motley Fool. You guys know the drill. If you want my writing to appear on your weblog, just use this link and send me a message. Or you can email financialuproar [at] gmail [dot] com. You could also send a regular letter, but I wouldn’t recommend it. Nobody likes the post office.
It was the Berkshire Hathaway annual meeting last weekend. That’s always fun for the people who attend. During the meeting, Buffett came out and said he was looking to make a big acquisition. I speculated a couple of names he might be looking at. Warren and I are tight.
Here are three gold stocks that everybody is shorting. There could be some big short squeezes if the price of gold spikes or they get some good news. Aside: while I think gold is kinda useless, you can still make money investing in gold companies. There are a lot of them in good solid contrarian territory right now. That’s not a recommendation. I’m just a little curious, that’s all.
The U.S. can’t export its own oil. It can, however, export Canadian oil. This presents an alternate option for excess Canadian crude, especially since the U.S. is only a couple of years away from producing most of its own energy needs. Go read, it’s interesting.
I talked about the unmitigated disaster that is Target’s expansion into Canada. Oh, Target.
And finally, I talked about how the demand for cars is set to actually be less than the industry believes. If true, this is pretty terrible news for auto investors. Customers should be happy though.
That’s about it. See you kids tomorrow for the link dump.