Recent high tech acquisitions

Apple buys Beats ElectronicsThis is perhaps the most high-profile tech acquisition in less than two weeks: Apple acquiring Beats Electronics, the headphone maker and music subscription service operator owned by the renowned music producer Jimmy Iovine and rapper Dr. Dre (real name Andre Young). The price tag is $3.2 billion. While Facebook, a significantly smaller […]

Apple buys Beats Electronics
This is perhaps the most high-profile tech acquisition in less than two weeks: Apple acquiring Beats Electronics, the headphone maker and music subscription service operator owned by the renowned music producer Jimmy Iovine and rapper Dr. Dre (real name Andre Young). The price tag is $3.2 billion. While Facebook, a significantly smaller company than Apple in terms of value, has been on extravagant shopping spree, Apple is a much more frugal company, with the Beats deal representing Apple’s largest acquisition ever! Beats headphones are quite trendy, pricy, but with huge profit margins, just like Apple’s own products, which also command very high prices compared to competing products.
There are speculations as to Apple’s motives. Those by Jan Dawson, chief analyst at Jackdaw, appear to be more accurate. He suggested that music download sales are in decline and accessories revenues are stagnant, and that they both contribute 8% to Apple’s total revenue, and Apple is buying Beats to sustain this source of revenue.
Dawson also wrote: “Given that core hardware growth is slowing too, creating greater leverage around the hardware revenue base – by increasing sales of related items such as content and accessories – is a smart way to keep revenue growth going, at least until a new hardware category emerges.”
Google picks up Stackdriver
In the face of stiff competition from the cloud masters (Amazon, Microsoft, Rackspace, VMWare, etc.), Google is picking up Stackdriver, a Boston U.S. company founded in 2012, to provide a shot in the arm for Google’s cloud business. Most of Stackdriver’s products and services are said to be largely focused on AWS (Amazon Web Services) but are also able to work with services from Rackspace and with Google Compute Engine. Stackdriver says the largest AWS customers use its products. Google will integrate Stackdriver’s functionality to take advantage of Stackdriver’s monitoring capabilities and provide more visibility into errors in cloud deployment, cloud performance issues, and operations. No financial details of the acquisition have been made public.
FireEye secures its position
After McAfee, the maker of the popular antivirus software that David DeWalt led, failed to detect the attack on 12 January 2010 on Google and several other tech companies by Chinese hackers that led to the theft of source code by the Chinese hackers, DeWalt left McAfee to become CEO and chairman of FireEye, another Silicon Valley security company that was founded a decade ago by Ashar Aziz. FireEye has come up with an entirely different way of protecting people’s data.
According to the 12-18 May 2014 issue of Bloomberg Businessweek, “Big corporations and Wall Street investors have embraced FireEye, who went public in September 2013, and was valued at $5.5 billion.” Businessweek also stated: “Edward Snowden’s revelations have helped turn FireEye into the fastest-growing star in the $12 billion cyber-security business.” To help maintain growth, FireEye has been buying up other cyber-security companies. On 6 May 2014 it announced the $70 million purchase of Charlottesville, VA (U.S.)-based network forensic company NPulse Technologies. In December 2013 it acquired Mandiant, a company that focuses on Chinese espionage, for about $1 billion.
Microsoft closes the Nokia deal
Microsoft confirmed on 25 April 2014 that it had completed its acquisition of Nokia’s handset division, as Microsoft moves to shift its business more toward the mobile and cloud markets. The deal, first announced in September of last year, is worth $7.2 billion. “The mobile capabilities and assets they bring will advance our transformation,” said Microsoft CEO Satya Nadella in a statement.
AT&T’s overtures to Direct TV
AT&T has approached satellite provider Direct TV about a possible acquisition, in a move that could enable AT&T integrate TV and broadband services. The deal would likely be worth $40 billion, if it goes through, this amount being Direct TV’s current market capitalization. AT&T itself has a capitalization of $185 billion.
This acquisition bid might as well be AT&T’s answer to a similar one by its rival, Comcast Corp., who is pursuing the acquisition of Time Warner Cable, Inc. for a $45 billion all-stock acquisition. Telecom operators and pay-TV providers around the world are under pressure from Internet-based voice and video services, who are giving the former, respectively, a run for their money. Moreover, diminishing revenues from voice and messaging resulting from competition from the likes of WhatsApp and Microsoft’s Skype are forcing operators to look for new sources of revenue. As the CIO magazine points out, “At the same time the battle for viewers is growing more intense thanks to content becoming available from a growing number of companies as well as products such as Amazon’s new Fire TV.” In a nutshell, AT&T, like everyone else, wants to remain relevant.
Facebook acquisitions
Facebook is perhaps the king of acquisitions, with the following in just the past six months. It spent $2 billion to acquire Oculus virtual reality company, and who can forget the $19 billion WhatsApp acquisition? Facebook also made its first acquisition (in January 2014) of an India company, Little Eye Labs, that specializes in developing app optimization tools, and acquired, also in January, the New-York-based Branch Media, the makers of the Branch and Potluck online conversation-sharing software packages. Lastly, Facebook acquired Mobile Data Compression Startup Onavo, to enable Facebook connect more people to the Internet.