Apple Expected to Pay $3 Billion for Beats

Low subscribers to company’s music streaming service lowered acquisition price initially reported.
3:29 | 05/28/14

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Transcript for Apple Expected to Pay $3 Billion for Beats
-- it's Wednesday may 28 the new finance New York financial markets are open and today's big number three billion dollars. With a -- that's right that's a new figure for how much Apple's expected to pay to acquire hi and headphone maker -- according to a report in today's New York Post. Hello everyone I'm Michelle Franzen in New York here with the details -- -- -- of Yahoo! finance. It -- an idea -- three billion dollars is a huge number of big number but it's lower than what was first reported that apple would pay for feet. So is -- a bargain. -- -- about a bargain ME three billion dollars is obviously still a lot of money beats a small company. It's not a lot of money for apple lets me exactly -- 1% of Apple's market value apple makes about forty billion dollars of cash flow year that it doesn't really have anything to do it unless it wants to buy -- so yes it's a big number what's interesting is that we should emphasize we're only talking about. Reports of talks about -- acquisitions of the prior report from the Financial Times was about a 3.2 billion dollar contemplated price for the headphone maker. Now -- down to three billion the post suggesting that -- because the streaming service is not really kind of had that much penetration out there with customers they're looking for a slightly lower number. Hard to say exactly what they might be haggling over -- that seems to -- one good thing. Oil let's talk about this little bit it's understood that apple is really after the beets music streaming service as you mentioned but today's report also says in the New York Post that -- may only have. -- 1116000. Subscribers. Now that's not such a huge number. It's not a huge number obviously in -- context you know Spotify and pandora with millions and millions of -- -- subscribers either free or paid. I do think -- -- -- probably shouldn't say too much about Apple's interest in buying. The streaming service for beads as it now stands I would I view this much more -- say there's a headphone company we sell a lot of them in the stores. People love them it's a good brand it billion dollars in revenue are -- there about just -- headphones and then this streaming service in the site is interesting perhaps. As a way to you know learn about that business may be have a bolt on to. ITunes radio or some other -- Apple's already contemplating. So I do think it's obviously not. -- the product out there that's that's at scale Aminu that 1111000 is really nothing but if they think technologies -- the people -- just think. Maybe it's a way to dip -- toe in the water makes some sense -- OK so there they're talking we don't know all the details but as our timeline here that we can expect to hear about the real deal. You know I there's no stated time lines there's nothing coming from the company -- we can expect but I do think it's the kind of thing that within weeks we really ought to hear something about the apple has some. Some big known events coming up there developers conference is that starts on June 2. So that's next week they are -- also you know -- playing their stock they're going to be getting into their pre earnings period I would think they'd want to have something nailed down. Within weeks and let's be honest. As I said before three billion dollars not a huge number for apple if it drags on much longer it's hard to see why that would be the case. If in fact they are going to come to a deal so I would expect sooner rather than later which to have some hard information on that. And allies will be watching apple for next week's announcements anyway -- and toll from Yahoo! finance thank you for joining us bank. You of course can keep up with the latest headlines right here on abcnews.com. You've been watching the big number I'm Michelle Franzen -- New York.

This transcript has been automatically generated and may not be 100% accurate.

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