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Why did Apple purchase NeXT for $429M?
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2.7182818284590...
Feb 29, 2012, 9:06:48 PM2/29/12
to
It took NeXT about 10 years to become profitable on $50M in revenues.
This amounted to $1M in profits, for a 2% profit margin in '95.
However, in '96, they were valued at $429M by Apple. It makes
absolutely no sense to me that this company is worth this much money.
What was the logic in buying a company with $50M in REVENUES for
$429M?
My working theory is that this purchasing price was viewed as being
the amount to bring back Steve Jobs. Apple probably knew that they
were spending too much money, but this is the amount that it would
have costed to bring back Steve Jobs as CEO one day. This is my
opinion of course.
---------------------------------------------------------------
1995
NeXT announce their financial results for 1994 on 21 February: $50
million in revenues; a net profit of $1 million.
NeXTSTEP 3.3 ships in February. NeXTSTEP 3.3 for Sparc ships in March.
NeXT acquire the Objective-C copyright from Stepstone in April.
NetInfo and Portable Distributed Objects 2.0 ship in April.
1996
NeXT announce Distributed OLE 3.5, EOF 1.1, and WebObjects on 30
January.
Apple buy NeXT for $429 million on 20 December.
This amounted to $1M in profits, for a 2% profit margin in '95.
However, in '96, they were valued at $429M by Apple. It makes
absolutely no sense to me that this company is worth this much money.
What was the logic in buying a company with $50M in REVENUES for
$429M?
My working theory is that this purchasing price was viewed as being
the amount to bring back Steve Jobs. Apple probably knew that they
were spending too much money, but this is the amount that it would
have costed to bring back Steve Jobs as CEO one day. This is my
opinion of course.
---------------------------------------------------------------
1995
NeXT announce their financial results for 1994 on 21 February: $50
million in revenues; a net profit of $1 million.
NeXTSTEP 3.3 ships in February. NeXTSTEP 3.3 for Sparc ships in March.
NeXT acquire the Objective-C copyright from Stepstone in April.
NetInfo and Portable Distributed Objects 2.0 ship in April.
1996
NeXT announce Distributed OLE 3.5, EOF 1.1, and WebObjects on 30
January.
Apple buy NeXT for $429 million on 20 December.
shortT
Feb 29, 2012, 9:33:46 PM2/29/12
to
On Feb 29, 9:06 pm, "2.7182818284590..." <tangent1...@gmail.com>
wrote:
figure to be 449M
wrote:
> It took NeXT about 10 years to become profitable on $50M in revenues.
> This amounted to $1M in profits, for a 2% profit margin in '95.
> However, in '96, they were valued at $429M by Apple. It makes
> absolutely no sense to me that this company is worth this much money.
> What was the logic in buying a company with $50M in REVENUES for
> $429M?
>
Using the time value of money on a 10 year horizon I calculated this
> This amounted to $1M in profits, for a 2% profit margin in '95.
> However, in '96, they were valued at $429M by Apple. It makes
> absolutely no sense to me that this company is worth this much money.
> What was the logic in buying a company with $50M in REVENUES for
> $429M?
>
figure to be 449M
Economics Ponderer
Mar 1, 2012, 2:17:14 AM3/1/12
to
Rod Speed
Mar 1, 2012, 6:11:00 PM3/1/12
to
2.7182818284590... wrote
\> It took NeXT about 10 years to become profitable on $50M in revenues.
Thats what any investment is about, what it will do in the future.
> My working theory is that this purchasing price was
> viewed as being the amount to bring back Steve Jobs.
Yes, that was clearly part of it. Apple was in some pretty deep shit
at the time and it is clear that bringing Jobs back did fix that problem.
You can make the case that that was peanuts in the benefit they got
from having Jobs back.
> Apple probably knew that they were spending too much money,
> but this is the amount that it would have costed to bring back
> Steve Jobs as CEO one day.
Thats never something anyone can calculate in that situation.
Or even caculate the value of Jobs return to Apple either.
\> It took NeXT about 10 years to become profitable on $50M in revenues.
> This amounted to $1M in profits, for a 2% profit margin in '95.
> However, in '96, they were valued at $429M by Apple. It makes
> absolutely no sense to me that this company is worth this much money.
> What was the logic in buying a company with $50M in REVENUES for $429M?
They obviously believed that it would do a lot better than that in the future.
> However, in '96, they were valued at $429M by Apple. It makes
> absolutely no sense to me that this company is worth this much money.
> What was the logic in buying a company with $50M in REVENUES for $429M?
Thats what any investment is about, what it will do in the future.
> My working theory is that this purchasing price was
> viewed as being the amount to bring back Steve Jobs.
at the time and it is clear that bringing Jobs back did fix that problem.
You can make the case that that was peanuts in the benefit they got
from having Jobs back.
> Apple probably knew that they were spending too much money,
> but this is the amount that it would have costed to bring back
> Steve Jobs as CEO one day.
Or even caculate the value of Jobs return to Apple either.
Ron Peterson
Mar 1, 2012, 9:11:00 PM3/1/12
to
On Feb 29, 6:06 pm, "2.7182818284590..." <tangent1...@gmail.com>
wrote:
multi-user, multi-tasking operating system with an advanced GUI based
on PostScript.
NeXT had a problem that it had abandoned hardware production and
couldn't make a profit by pricing its OS at an affordable level.
--
Ron
wrote:
> It took NeXT about 10 years to become profitable on $50M in revenues.
> This amounted to $1M in profits, for a 2% profit margin in '95.
> However, in '96, they were valued at $429M by Apple. It makes
> absolutely no sense to me that this company is worth this much money.
> What was the logic in buying a company with $50M in REVENUES for
> $429M?
> My working theory is that this purchasing price was viewed as being
> the amount to bring back Steve Jobs. Apple probably knew that they
> were spending too much money, but this is the amount that it would
> have costed to bring back Steve Jobs as CEO one day. This is my
> opinion of course.
Apple didn't have a viable operating system going forward. NeXT had a
> This amounted to $1M in profits, for a 2% profit margin in '95.
> However, in '96, they were valued at $429M by Apple. It makes
> absolutely no sense to me that this company is worth this much money.
> What was the logic in buying a company with $50M in REVENUES for
> $429M?
> My working theory is that this purchasing price was viewed as being
> the amount to bring back Steve Jobs. Apple probably knew that they
> were spending too much money, but this is the amount that it would
> have costed to bring back Steve Jobs as CEO one day. This is my
> opinion of course.
multi-user, multi-tasking operating system with an advanced GUI based
on PostScript.
NeXT had a problem that it had abandoned hardware production and
couldn't make a profit by pricing its OS at an affordable level.
--
Ron
shortT
Mar 1, 2012, 10:38:18 PM3/1/12
to
Jared
Mar 2, 2012, 12:35:46 AM3/2/12
to
Ron Peterson
Mar 3, 2012, 8:02:42 PM3/3/12
to
Tevanian was probably a better acquisition for Apple than Jobs.
The Mach operating system made it possible to move between platforms
and porting to Intel worked, but NeXT users lost the use of some third
party software.
Objective C is more elegant than C++, but somehow hasn't attracted a
following other than for Apple.
--
Ron
Rod Speed
Mar 3, 2012, 8:26:49 PM3/3/12
to
Ron Peterson wrote:
> Jared <jared4...@gmail.com> wrote
The iphone didnt even have multitasking until 4
Those were what saved Apple, not the Mac.
> Jared <jared4...@gmail.com> wrote
>> Ron Peterson wrote
>>> Apple didn't have a viable operating system going forward. NeXT had
>>> a multi-user, multi-tasking operating system with an advanced GUI
>>> based on PostScript.
>>> NeXT had a problem that it had abandoned hardware production
>>> and couldn't make a profit by pricing its OS at an affordable level.
>> See:http://en.wikipedia.org/wiki/Avie_Tevanian
> Tevanian was probably a better acquisition for Apple than Jobs.
Nope, it wasnt the OS that drove the ipod, ipad or iphone.
>>> Apple didn't have a viable operating system going forward. NeXT had
>>> a multi-user, multi-tasking operating system with an advanced GUI
>>> based on PostScript.
>>> NeXT had a problem that it had abandoned hardware production
>>> and couldn't make a profit by pricing its OS at an affordable level.
>> See:http://en.wikipedia.org/wiki/Avie_Tevanian
> Tevanian was probably a better acquisition for Apple than Jobs.
The iphone didnt even have multitasking until 4
Those were what saved Apple, not the Mac.
Jared
Mar 3, 2012, 9:08:12 PM3/3/12
to
On 3/3/2012 8:26 PM, Rod Speed wrote:
> Ron Peterson wrote:
>> Jared<jared4...@gmail.com> wrote
>>> Ron Peterson wrote
>
>>>> Apple didn't have a viable operating system going forward. NeXT had
>>>> a multi-user, multi-tasking operating system with an advanced GUI
>>>> based on PostScript.
>
>>>> NeXT had a problem that it had abandoned hardware production
>>>> and couldn't make a profit by pricing its OS at an affordable level.
>
>>> See:http://en.wikipedia.org/wiki/Avie_Tevanian
>
>> Tevanian was probably a better acquisition for Apple than Jobs.
>
> Nope, it wasnt the OS that drove the ipod, ipad or iphone.
>
> The iphone didnt even have multitasking until 4
>
> Those were what saved Apple, not the Mac.
"Saving" Apple didn't require turning it into a $500 billion
> Ron Peterson wrote:
>> Jared<jared4...@gmail.com> wrote
>>> Ron Peterson wrote
>
>>>> Apple didn't have a viable operating system going forward. NeXT had
>>>> a multi-user, multi-tasking operating system with an advanced GUI
>>>> based on PostScript.
>
>>>> NeXT had a problem that it had abandoned hardware production
>>>> and couldn't make a profit by pricing its OS at an affordable level.
>
>>> See:http://en.wikipedia.org/wiki/Avie_Tevanian
>
>> Tevanian was probably a better acquisition for Apple than Jobs.
>
> Nope, it wasnt the OS that drove the ipod, ipad or iphone.
>
> The iphone didnt even have multitasking until 4
>
> Those were what saved Apple, not the Mac.
company. I think it's reasonable to say it was saved from
a declining future long before the iPad or iPhone.
Also, people exaggerate how much trouble Apple was in at its
low point. They always had a huge amount of cash for their
size, so debt was not a problem. The problem was remaining
viable and coming up with future products in a Wintel world.
--
Jared
Rod Speed
Mar 4, 2012, 4:50:12 PM3/4/12
to
Jared wrote
Even HP has given up on PCs in the most generic sense of the term now.
The Mac was dying and it was only a matter of time before it
was gone too if it hadnt been for the ipods, iphones and ipads.
> I think it's reasonable to say it was saved from
> a declining future long before the iPad or iPhone.
No it is not. The Mac never had much of a future by then.
> Also, people exaggerate how much trouble Apple was in at its low point.
Others have noticed what happened to Commodore, Compaq, HP, Lenovo, etc etc etc.
> They always had a huge amount of cash for their size, so debt was not a problem.
Debt only works if the operation has a future. Without the ipods, iphones, ipads, Apple didnt.
> The problem was remaining viable and coming up with future products in a Wintel world.
And thats why they needed the ipods, iphones and ipads. The Macs were never gunna save their bacon.
> Rod Speed wrote
>> Ron Peterson wrote:
>>> Jared<jared4...@gmail.com> wrote
>>>> Ron Peterson wrote
>>>>> Apple didn't have a viable operating system going forward. NeXT had a multi-user, multi-tasking operating system
>>>>> with an advanced GUI based on PostScript.
>>>>> NeXT had a problem that it had abandoned hardware production
>>>>> and couldn't make a profit by pricing its OS at an affordable level.
>>>> See:http://en.wikipedia.org/wiki/Avie_Tevanian
>>> Tevanian was probably a better acquisition for Apple than Jobs.
>> Nope, it wasnt the OS that drove the ipod, ipad or iphone.
>> The iphone didnt even have multitasking until 4
>> Those were what saved Apple, not the Mac.
> "Saving" Apple didn't require turning it into a $500 billion company.
Thats very arguable indeed given that everyone else was going down the tubes.
>> Ron Peterson wrote:
>>> Jared<jared4...@gmail.com> wrote
>>>> Ron Peterson wrote
>>>>> Apple didn't have a viable operating system going forward. NeXT had a multi-user, multi-tasking operating system
>>>>> with an advanced GUI based on PostScript.
>>>>> NeXT had a problem that it had abandoned hardware production
>>>>> and couldn't make a profit by pricing its OS at an affordable level.
>>>> See:http://en.wikipedia.org/wiki/Avie_Tevanian
>>> Tevanian was probably a better acquisition for Apple than Jobs.
>> Nope, it wasnt the OS that drove the ipod, ipad or iphone.
>> The iphone didnt even have multitasking until 4
>> Those were what saved Apple, not the Mac.
> "Saving" Apple didn't require turning it into a $500 billion company.
Even HP has given up on PCs in the most generic sense of the term now.
The Mac was dying and it was only a matter of time before it
was gone too if it hadnt been for the ipods, iphones and ipads.
> I think it's reasonable to say it was saved from
> a declining future long before the iPad or iPhone.
> Also, people exaggerate how much trouble Apple was in at its low point.
> They always had a huge amount of cash for their size, so debt was not a problem.
> The problem was remaining viable and coming up with future products in a Wintel world.
Jared
Mar 5, 2012, 12:02:06 AM3/5/12
to
On 3/4/2012 4:50 PM, Rod Speed wrote:
> Jared wrote
>> Rod Speed wrote
>>> Ron Peterson wrote:
>>>> Jared<jared4...@gmail.com> wrote
>>>>> Ron Peterson wrote
>
>>>>>> Apple didn't have a viable operating system going forward. NeXT had a multi-user, multi-tasking operating system
>>>>>> with an advanced GUI based on PostScript.
>
>>>>>> NeXT had a problem that it had abandoned hardware production
>>>>>> and couldn't make a profit by pricing its OS at an affordable level.
>
>>>>> See:http://en.wikipedia.org/wiki/Avie_Tevanian
>
>>>> Tevanian was probably a better acquisition for Apple than Jobs.
>
>>> Nope, it wasnt the OS that drove the ipod, ipad or iphone.
>
>>> The iphone didnt even have multitasking until 4
>
>>> Those were what saved Apple, not the Mac.
>
>> "Saving" Apple didn't require turning it into a $500 billion company.
>
> Thats very arguable indeed given that everyone else was going down the tubes.
> Even HP has given up on PCs in the most generic sense of the term now.
>
> The Mac was dying and it was only a matter of time before it
> was gone too if it hadnt been for the ipods, iphones and ipads.
>
I'm taking issue with your grouping those products all together.
> Jared wrote
>> Rod Speed wrote
>>> Ron Peterson wrote:
>>>> Jared<jared4...@gmail.com> wrote
>>>>> Ron Peterson wrote
>
>>>>>> Apple didn't have a viable operating system going forward. NeXT had a multi-user, multi-tasking operating system
>>>>>> with an advanced GUI based on PostScript.
>
>>>>>> NeXT had a problem that it had abandoned hardware production
>>>>>> and couldn't make a profit by pricing its OS at an affordable level.
>
>>>>> See:http://en.wikipedia.org/wiki/Avie_Tevanian
>
>>>> Tevanian was probably a better acquisition for Apple than Jobs.
>
>>> Nope, it wasnt the OS that drove the ipod, ipad or iphone.
>
>>> The iphone didnt even have multitasking until 4
>
>>> Those were what saved Apple, not the Mac.
>
>> "Saving" Apple didn't require turning it into a $500 billion company.
>
> Thats very arguable indeed given that everyone else was going down the tubes.
> Even HP has given up on PCs in the most generic sense of the term now.
>
> The Mac was dying and it was only a matter of time before it
> was gone too if it hadnt been for the ipods, iphones and ipads.
>
The first iPod came out circa 2001. If you said the iPod saved them,
that's reasonable. The iPad (2010) and the iPhone (2007) didn't save
them, because an eternity (in the tech industry) had passed since the
iPod and iTunes came out and Apple had become a giant already.
Apple matched its tech-bubble high around the end of 2004; its
growth after that goes beyond merely becoming a viable company.
--
Jared
Rod Speed
Mar 5, 2012, 1:14:47 AM3/5/12
to
Jared wrote
> Rod Speed wrote
>> Jared wrote
>>> Rod Speed wrote
>>>> Ron Peterson wrote:
>>>>> Jared<jared4...@gmail.com> wrote
>>>>>> Ron Peterson wrote
>>>>>>> Apple didn't have a viable operating system going forward. NeXT had a multi-user, multi-tasking operating system
>>>>>>> with an advanced GUI based on PostScript.
>>>>>>> NeXT had a problem that it had abandoned hardware production
>>>>>>> and couldn't make a profit by pricing its OS at an affordable level.
>>>>>> See:http://en.wikipedia.org/wiki/Avie_Tevanian
>>>>> Tevanian was probably a better acquisition for Apple than Jobs.
>>>> Nope, it wasnt the OS that drove the ipod, ipad or iphone.
>>>> The iphone didnt even have multitasking until 4
>>>> Those were what saved Apple, not the Mac.
>>> "Saving" Apple didn't require turning it into a $500 billion company.
>> Thats very arguable indeed given that everyone else was going down the tubes. Even HP has given up on PCs in the most
>> generic sense of the term now.
>> The Mac was dying and it was only a matter of time before it
>> was gone too if it hadnt been for the ipods, iphones and ipads.
> I'm taking issue with your grouping those products all together.
I was only doing that in the sense of what saved Apple.
> Rod Speed wrote
>> Jared wrote
>>> Rod Speed wrote
>>>> Ron Peterson wrote:
>>>>> Jared<jared4...@gmail.com> wrote
>>>>>> Ron Peterson wrote
>>>>>>> Apple didn't have a viable operating system going forward. NeXT had a multi-user, multi-tasking operating system
>>>>>>> with an advanced GUI based on PostScript.
>>>>>>> NeXT had a problem that it had abandoned hardware production
>>>>>>> and couldn't make a profit by pricing its OS at an affordable level.
>>>>>> See:http://en.wikipedia.org/wiki/Avie_Tevanian
>>>>> Tevanian was probably a better acquisition for Apple than Jobs.
>>>> Nope, it wasnt the OS that drove the ipod, ipad or iphone.
>>>> The iphone didnt even have multitasking until 4
>>>> Those were what saved Apple, not the Mac.
>>> "Saving" Apple didn't require turning it into a $500 billion company.
>> Thats very arguable indeed given that everyone else was going down the tubes. Even HP has given up on PCs in the most
>> generic sense of the term now.
>> The Mac was dying and it was only a matter of time before it
>> was gone too if it hadnt been for the ipods, iphones and ipads.
> I'm taking issue with your grouping those products all together.
> The first iPod came out circa 2001. If you said the iPod saved them,
> that's reasonable. The iPad (2010) and the iPhone (2007) didn't save
> them, because an eternity (in the tech industry) had passed since the
> iPod and iTunes came out and Apple had become a giant already.
always going to saturate and more and more wouldnt bother to have
a separate ipod once their cellphone could do what it did music wise.
> Apple matched its tech-bubble high around the end of 2004;
> its growth after that goes beyond merely becoming a viable company.
gone down the tubes like Commodore, Compaq, Lenovo etc etc etc did eventually.
-DirtBag
Mar 5, 2012, 12:00:11 PM3/5/12
to
Wrong.
The Apple eMac (education Mac) in 2002 was the first big seller after
Jobs took the reigns. People lined up to buy the colorful all in one
desktop. It was when Jobs came back to Apple.
The Apple eMac (education Mac) in 2002 was the first big seller after
Jobs took the reigns. People lined up to buy the colorful all in one
desktop. It was when Jobs came back to Apple.
Jared
Mar 5, 2012, 7:46:58 PM3/5/12
to
On 3/5/2012 12:00 PM, -DirtBag wrote:
> Wrong.
>
> The Apple eMac (education Mac) in 2002 was the first big seller after
> Jobs took the reigns. People lined up to buy the colorful all in one
> desktop. It was when Jobs came back to Apple.
>
You're thinking of the iMac and 1998.
> Wrong.
>
> The Apple eMac (education Mac) in 2002 was the first big seller after
> Jobs took the reigns. People lined up to buy the colorful all in one
> desktop. It was when Jobs came back to Apple.
>
The eMac was not colorful. I don't know the exact sales figures,
but I'm sure they were small in comparison to the iMac.
--
Jared
DirtBag
Mar 22, 2012, 10:11:52 AM3/22/12
to
There was a laptop too that was colorful. It flopped I think.
With the Imac, Colorful all in one and it Seems like every dorm room had
one. Thanks for the correction.
-Dirt
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