Is Apple Inc. (NASDAQ:AAPL) crackerjack nuts for trying to buy Dr. Dre’s Beats Electronics for $3.2 billion? Analyst Brian White of Cantor Fitzgerald doesn’t think so. He provided his analysis of that rumor—which we hope isn’t true but sounds like it might be—along with the latest results from his aptly named Apple Barometer.
Apple’s April “stronger than historical seasonality”
In a report dated May 9, 2014, White said he continues to believe that this year will be the “Year of Innovation for Apple Inc. (NASDAQ:AAPL). He said his Apple Barometer indicates that the company is doing well, even during times of historical seasonality. He noted a 7% month over month increase in sales in April, which is well above the 1% decline average over the last nine years. He said 7% is close to record growth for his barometer’s April results.
Third Point's Dan Loeb discusses their new positions in a letter to investor reviewed by ValueWalk. Stay tuned for more coverage. Loeb notes some new purchases as follows: Third Point’s investment in Grab is an excellent example of our ability to “lifecycle invest” by being a thought and financial partner from growth capital stages to Read More
The barometer is made up of results from top suppliers in Taiwan which get a “higher percentage” of their sales from Apple Inc. (NASDAQ:AAPL). He also reported, however, that Apple supplier Hon Hai Precision Industry Co., Ltd (OTCMKTS:HNHPF) (TPE:2317) reported a 4% decline in sales month over month for April, which is of course weaker than the average 1% decline.
Dr. Dre versus drones
While other technology companies like Amazon.com, Inc. (NASDAQ:AMZN) and Google Inc (NASDAQ:GOOGL) (NASDAQ:GOOG) hop on the drone bandwagon, he notes that Apple Inc. (NASDAQ:AAPL) appears to be moving in a different direction altogether by trying to acquire Dr. Dre’s Beats Electronics. The company’s most well-known product is the big headphones which are popular among kids. Apple sells the headphones in its retail stores. Beats also makes other accessories related to music, like speakers.
White suggests that the one thing Beats may have that Apple Inc. (NASDAQ:AAPL) could be interested in is Beats Music. The streaming music service launched in the U.S. in January and recently acquired music promotions company Topspin Media. Beats Music markets itself as “the first music service that understands you.” It uses proprietary algorithms to suggest music to users based on their moods, where they are, and who they’re with at a specific time. He believes the algorithm could also be used for movies and other media.
The analyst continues to rate Apple Inc. (NASDAQ:AAPL) as a Buy with a $777 per share price target.