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Apple Skull Scratcher -- Why Would Apple Buy Beats?: StockTwits

NEW YORK (TheStreet) -- Dr. Dre is celebrating today at the expense of Apple (AAPL) shareholders.

Cash-rich Apple is reportedly considering acquiring Beats Electronics, a music streaming company and premium headphone maker co-founded by producers Dr. Dre and Jimmy Iovine, for $3.2 billion. The Financial Times first reported the prospective deal, which was subsequently confirmed in a Reuters' report citing "two people familiar with the matter." An email to Apple's press office was not immediately returned.

Dre released a video on YouTube hinting that his company was about to be acquired for billions.

$AAPL Dr. Dre, Tyrese share Heineken-fueled celebration of Apple's alleged Beats acquisition, nice work guys http://stks.co/f0bAH ? Tim (@Skevaboy) May. 9 at 09:17 AM

But while Dre toasted a coming windfall, investors on StockTwits.com scratched their heads. Why would Apple, which has its iTunes radio streaming service, buy another streaming service and headphone maker for such a high price? The stock fell 0.9% by 10:45 a.m, to $582.70.

$aapl instead of wasting money on Beats why don't they raise their miserable div to 5%? My Mother said:A fool and his money is soon parted. ? J. Meek (@pupcat) May. 9 at 09:30 AM

$AAPL so when it splits do I get a free pair of overpriced headphones with my new shares? I'll take 20 pairs of decent earbuds instead ? Krull (@Hitthebidradio) May. 9 at 08:52 AM

Some speculated that the acquisition was intended to increase Apple's relevancy among younger people. Though Apple's iPhone hasn't lost its cache, Samsung's (SSNLF) Droid phones have gained significant popularity. And Droid phones dominate the market, particularly among people in the 18- to 24-year-old demographic, according to a June report from marketingprofs.com.

$AAPL it seems like they are targeting teen crowd which is fine but terrible financial decision to pay 3 billion ? Satish Mathan (@smathan75) May. 9 at 09:01 AM

But if increasing relevancy with teenagers is Apple's goal, Beats Electronics might not help. The $300 price tag of Beats' headphones is out of reach for most young people. Beats' gear is really targeted to an older demographic that can afford to shell out for better sound quality -- or at least a lot of bass. However, young people might aspire to own Beats' headphones, which could add a cool factor.

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