Dr. Dre & Jimmy Iovine's Beats Electronics Receives $500 Million Investment

[Elano The One And Only]

Beats Electronics has already drawn in huge numbers of fans of its colorful, expensive headphones. Now, the audio company, founded by the music impresarios Dr. Dre and Jimmy Iovine, has attracted the support of a top private equity firm.

Beats said on Friday that it had secured a minority investment from the Carlyle Group to help finance growth. Carlyle is paying $500 million, according to a person briefed on the matter, valuing the music company at more than $1 billion. It will also take two of six seats on Beats' board.

The electronics maker will also buy back the 25 percent stake held by HTC, the Taiwanese smartphone company. In a separate statement, HTC disclosed that it received $265 million for the stake and that Beats also repaid a $150 million note held by HTC.

The investment by Carlyle is one of the biggest yet to Beats, whose signature Beats by Dr. Dre headphones have seized a huge portion of the premium headphone market. The company claims about 64 percent of the market for headphones costing more than $100, according to the NPD Group.

But the company has moved into new businesses, including speakers and sound systems for Hewlett-Packard computers and HTC phones. Last year, Beats bought the online music streaming service Mog for more than $14 million.

The company is now on track to collect more than $1.2 billion in revenue this year.

"These transactions represent the evolution of the financial strength and significant growth prospects of Beats," Mr. Iovine, the company's chief executive, said in a statement.

The deal is the latest milestone for Beats, which was founded seven years ago after Mr. Iovine told his friend that selling speakers would make more money than hawking sneakers.

The two began with instantly recognizable bulky headphones that became fashion statements as well as earpieces. They also deployed their star wattage — Dr. Dre as a well-known hip-hop producer, Mr. Iovine as a longtime record executive — and connections in the industry, securing product placements and endorsements by celebrities. Earlier this year, for example, the Beats Pill line of wireless speakers were featured prominently in the Miley Cyrus "We Can't Stop" music video and a Radio Shack ad built around Robin Thicke's racy hit "Blurred Lines."

With Carlyle's help, Beats will move to take more control of its destiny, including severing its ties to HTC.

The Taiwanese cellphone maker bought half of Beats three years ago for about $309 million, and soon afterward began putting Beats sound systems in some of its phones.

But as HTC has struggled in the smartphone business, slipping far behind Samsung, it has moved to sell down its holdings in its partner. Last year, HTC sold about half of its stake, or 25 percent of Beats, back to the company for $150 million.

Now, Beats is allying with Carlyle, which is betting on the continued success of mobile devices — and of Dr. Dre and Mr. Iovine.

"We are confident that Beats will continue to drive innovation and growth in the premium audio accessory market, particularly as the proliferation of smartphones and tablets stimulate increased consumption of digital media," Sandra J. Horbach, head of Carlyle's consumer and retail team, said in a statement.

Mr. Iovine added, "Carlyle is a fantastic investment partner and we look forward to building the next chapter of Beats."

[V2DHeart]

Beats headphones are exactly like Apple iphones. Promoted as "the most expensive on the market" simply to push to the masses of insecure people out there who feel that if they purchase these overpriced fashion accessories, then their social status will increase and their lives will become a lot better. Cringing when you see people wearing these overpriced items over their heads, nodding away to the music thinking they're the shyt, like some big time player, yet are usually waiting outside in the cold waiting for a bus to take them to their shitty low paid office job

I've lost count the number of idiots who have purchased an iphone 4s, then got the iphone 5, with great anticipation of the 5s. My Sennheiser ones cost a little more than beats. Unfortunately, I don't get the benefit of skittle colours or bright LED's to make me look cool in public, but I do get a 10 year warranty on them

[bouli77]

My Sennheiser ones cost a little more than beats. Unfortunately, I don't get the benefit of skittle colours or bright LED's to make me look cool in public, but I do get a 10 year warranty on them

not to mention sennheiser headphones have been hailed as the best headphones in the market while beats have been rated as average by most audio experts.

[V2DHeart]

I don't know, but would take your word for it 

I throw them in suitcases (travel a lot) in laptop bags while boarding planes, and they go through a lot of ruff and tumble. I got these by working out how many pairs I usually go through and worked out that I paid around £30 every 1-2 years on headphones. So it could be from £150 - £300 spent within 10 years, so I thought I'd go with a pair that gave a yen year warranty.

I've had £20-50 headphones in the past and been unable to tell the difference.

I think build and sturdiness through the manufacturing process, the insulation and phase wiring, and what "quality" you really get is miles better than customizing or tweaking existing technology. Nothing is "new" with headphones regardless of how they make it appear on the write ups.

In some instances, you can get what you pay for, but products like Apple and Beats, are brands usually sold by their logo's alone. It seems to be the way with most things these days. Give it a sleek smooth design and market it at high cost, and it will sell