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By Martin Denholm, Editor-in-Chief
File this one under: “Bound to Happen.”
If you remember, Apple forked out $ 3 billion in May to buy Beats Electronics from hip hop artist, Dr. Dre, and music producer, Jimmy Iovine, who co-founded the firm in 2008.
The acquisition was notable both for its size – thought to be the biggest in Apple’s history – as well as its “What?” factor.
After the announcement, some analysts wondered why Apple would spend so much on a streaming music service, given that it already boasts iTunes. They’ve questioned Apple’s goal here.
Well, they’re clearly not paying attention…
Apple and Beats: Musical Fusion or Musical Madness?
Yes… it’s true that most of Apple’s acquisitions tend to be small, unknown companies. Ones brimming with incredible talent and innovation that Apple quickly rolls up into its existing business.
So in that regard, the Beats buyout is different from its normal acquisition strategy.
But there’s a method behind what some analysts called madness.
While iTunes is an unquestionably massive digital music platform (it’s the world’s largest music downloading service), and iTunes Radio launched last year, the iTunes star is fading amid competition from popular streaming music services like Spotify, Pandora (P), and Rdio.
And streaming music becomes the new normal, iTunes downloads are declining.
Known mostly for its headphones, Beats also launched its own subscription-based streaming music service earlier this year.
That’s when Apple pounced…
Apple Dances to the Beats
In keeping with his promise to launch new products this year, Apple chief, Tim Cook, wasted little time in snapping up Beats.
He explained the decision to The New York Times: “Could Eddy’s team [Eddy Cue is Apple’s iTunes chief] have built a subscription service? Of course. But you don’t build everything yourself. It’s not one thing that excites us here. It’s the people. It’s the service. [Iovine and Dre] are really unique. It’s like finding the precise grain of sand on the beach. They’re rare and very hard to find.”
To that end, both Iovine and Dre will join Apple, too.
So for Apple, it’s essentially a shortcut (albeit a $ 3-billion one) into the streaming music business, as Cook aims to “continue to create the most innovative music products and services in the world.”
Not only that, it makes a major splash in the industry and send shockwaves through its rivals.
While Beats only has 250,000 paying subscribers, compared to Spotify’s 10 million, pushing Beats to every single iPhone and iPad user via a pre-installed Apple update is an unquestionable game changer for both Apple and Beats.
In addition, of course, Apple will grab revenue from Beats’ other products – headphones and speakers, sold to consumers individually, as well as integrating its audio technology into computers and car manufacturers’ sound systems.
And while some doubt the quality of the BeatsAudio equipment (despite having Dr. Dre’s name and reputation behind them) he remains a star attraction, with significant pulling power.
For Apple, this is all about branching out and branding. The company hopes Beats will help it both shake up the streaming music business, as well as adding strong name and brand recognition to its existing reputation.
Look for Beats to hit an iPhone or iPad near you in the New Year.
Today’s After Hours Earnings: Intuit Inc., Marvell Technology Group Ltd., Ross Stores, Inc. (INTU, MRVL, ROST)
After the bell on Thursday, a number of big name, dividend paying companies announced their quarterly earnings. Below, we look at these earnings reports and break down the important points for investors.
Intuit Posts Q1 Loss; Beats Estimates
Intuit Inc. (INTU) reported first quarter revenues of $ 672 million, marking an 8% increase over last year’s Q1 revenues of $ 622 million. The company reported a Q1 operating loss of $ 114 million, or 29 cents per share, which is a larger loss than last year’s Q1 figures of $ 77 million, or 4 cents per share. On an adjusted basis, INTU’s loss per share came in at 10 cents. INTU beat analysts’ expectations of a 20 cent per share loss on revenues of $ 620.8 million. For the next quarter, INTU sees a loss per share between 11 cents and 13 cents, while analysts are expecting an 11 cent loss. For FY2015, INTU expects EPS of $ 2.45-$ 2.50, while analysts expect $ 2.48.
Marvell Technology Meets Q3 EPS Estimates; Misses on Revenue
Marvell Technology Group Ltd. (MRVL) reported third quarter revenues of $ 930.14 million, down from last year’s Q3 revenues of $ 961.6 million. MVRL’s revenues missed analysts’ $ 976.1 million expectation. Net income for the quarter was also down, coming in at $ 115.3 million, or 22 cents per diluted share, compared to last year’s $ 138.9 million, or 27 cents per diluted share. On an adjusted basis, MRVL’s EPS came in at 29 cents, meeting analysts’ expectations. For Q4, Marvell sees EPS in the range of 22 cents to 26 cents, while analysts are expecting 26 cents.
Ross Stores Beats Q3 Estimates; Guides Below Views
Ross Stores (ROST) reported third quarter sales of $ 2.6 billion, up from last year’s Q3 sales of $ 2.4 billion. Net earnings for the quarter came in at $ 192.7 million, or 93 cents per diluted share, which is also up from last year’s Q3 figures of $ 171.6 million, or 80 cents per diluted share. ROST beat analysts’ expectations of 87 cents EPS on revenues of $ 2.55 billion. Looking ahead to the next quarter, ROST sees EPS in the range of $ 1.05-$ 1.09, which is below analysts’ expectations of $ 1.10.
By Martin Denholm, Editor-in-Chief
The classic slapstick comedy movie, Airplane, tends to be one of those films that you either love or hate.
Some people find it hilarious; other think it’s dumb.
Put me in the first category.
When I saw the following story, it triggered a memory of the scenes where the inflatable autopilot takes over the controls when the human pilots fall ill.
We’re all familiar with autopilot… but an inflatable one?
That would surely take top spot on the implausibility scale.
Now, while human pilots are in no danger of being replaced by inflatable dolls, they should, however, be more worried about these guys…
Would You Let This Fellow Pilot Your Next Flight?
In South Korea, engineers are developing the next captain in the cockpit.
And what he lacks in charm and charisma, he makes up for with intelligence.
At the Advanced Institute of Science and Technology, Pibot is the world’s first humanoid pilot.
Now, if you’re worried about a hunk of metal piloting your future flights… I hear you. It’s one of those innovations that takes a while to get your head around.
But the field of robotics and artificial intelligence grows fast, it’s little surprise that this is on the “to-do” list for engineers.
Understand that the South Koreans’ innovation is different from autonomous drone technology. While that’s geared towards specific aircraft and missions, their humanoid design is more versatile.
What distinguishes their design is that the robots would be built to fly any aircraft with no additional sensors.
As creator, Shim Hyun-Chul, says, “While many existing drones have been developed, Pibot is the world’s first robot that can immediately automate any kind of aircraft.”
Their thinking is simple: All aircraft were designed and built to be flown by humans. So let’s design a robot that can fly like a human.
Sounds rational enough.
Besides, the idea came from a tragic event, where putting humans in harm’s way would have been highly dangerous…
A Design Born From Disaster
When the Japanese earthquake of 2011 triggered a devastating tsunami, it smashed many areas of the coastline and beyond.
Chief among the casualties was the Fukushima nuclear plant.
Hyun-Chul explains, “There was a helicopter that was trying to spray extinguishing agents, but it couldn’t get close to the site because of the radiation hazard [for the pilots].”
He says Pibot could have solved that issue.
The robotics are engineered so that they communicate with a plane’s instruments and sensors. It’s able to read the data and automate the functionality accordingly. For example, in the same way that existing autopilot technology is able to control a plane, Pibot uses computer data and vision to navigate during takeoff and landing.
Take a look…
As a result, Pibot’s missions are designed to be perilous ones – flying planes and helicopters into danger zones.
The South Korean team has put Pibot through rigorous flight simulation training, as well as field tests. Next up: Putting Pibot behind the controls of a full-scale plane to really see if the guy can earn his wings.
After-Hours Stocks Movers 11/19: (CZR) (CRMT) (WSM) (EYES) Higher; (DWCH) (HI) (CRM) (GMCR) Lower (more…)
Datawatch Corp (NASDAQ: DWCH) 25.4% LOWER; reported Q3 EPS of ($ 0.18), $ 0.01 better than the analyst estimate of ($ 0.19). Revenue for the quarter came in at $ 9.05 million versus the consensus estimate of $ 10.17 million.
Hillenbrand (NYSE: HI) 12% LOWER; reported Q4 EPS of $ 0.61, in-line with the analyst estimate of $ 0.61. Revenue for the quarter came in at $ 468.7 million versus the consensus estimate of $ 469.1 million. Hillenbrand sees FY2014 EPS of $ 2.05-$ 2.15, versus the consensus of $ 2.23.
Caesars Entertainment (NASDAQ: CZR) 11.4% HIGHER; proposal said to turn operating unit into REIT. According to Bloomberg, Caesars’ plan would
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