Apple Axing About 40 Percent of Beats’ Workforce in Acquisition
It appears that not every Beats Electronics employee will make the transition to a new Cupertino, California-based job. According to unnamed sources cited by the New York Post, Apple (NASDAQ:AAPL) will be eliminating approximately 200 positions from Beats when the premium headphone maker and subscription music service company is subsumed by the iPhone maker on August 1. The cuts represent about 40 percent of Beats’ total global workforce, according to the sources.
Apple executives informed Beats’ employees about the upcoming cuts during a visit to the company’s Southern California headquarters this week. “Last week everyone was given an offer from Apple,” said an unnamed source who spoke to the New York Post. “Some were transitional offers with a set end date.”
The layoffs at Beats were first reported by 9to5Mac before it was known precisely how many jobs were being eliminated. However, the total number of job cuts has now been confirmed by multiple media outlets, including Bloomberg. According to sources cited by Bloomberg, most of the job cuts will impact areas where there are redundancies between Apple and Beats’ operations, such as finance and human resources. According to 9to5Mac, Apple has established a hotline for Beats employees who have questions about their severance packages or other transition details.
While Beats employees in jobs that overlap with positions already found at Apple will be eliminated, the layoffs do not include the company’s key creative talent. Apple has already confirmed that co-founders Jimmy Iovine and Dr. Dre will join Apple in unspecified positions. Similarly, Beats Music Chief Creative Officer Trent Reznor, Beats Electronics President and CCO Luke Wood, and Beats Music CEO Ian Rogers will all join Apple, according to the New York Post’s report.
Apple first announced that it was purchasing Beats Electronics and the Beats Music streaming service for a combined $3 billion in May. The purchase is the most expensive acquisition in Apple’s history after its $400 million purchase of NeXT in 1997.
Many industry watchers believe that one of the primary reasons that Apple made the deal was so that it could acquire Beats Music, a subscription-based music streaming service that will help the company offset the decreasing number of digital download sales made through iTunes. Overall, digital download sales have been steadily falling over the past two years, according to research done by Nielsen, while the on-demand audio streaming market has grown.
Although the Apple-Beats deal must be approved by U.S. regulators before it is finalized, it appears more than likely than it will be completed without a hitch. Earlier this week, the European Commission approved the acquisition for the European Economic Area (EEA) after noting that the relatively small size of the companies’ two overlapping businesses and the existence of several other large competitors meant that the deal wouldn’t create any “anticompetitive effects.”
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