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Is Beats Worth More Than $3.2 Billion?

Make no mistake: If Apple does buy the Beats Electronics headphone empire for $3.2 billion, it will be a huge windfall for two music industry veterans—co-founders Dr. Dre and Jimmy Iovine—who until recently had little expertise in hardware, manufacturing, and supply chains. But since they’ve already sold almost half the company at a much lower price, could their triumphant haul be even bigger?

Their ear-goggle empire, to put it quite simply, generates a lot of sales—somewhere around $1.3 billion a year, according to Carlyle Group, which bought a little less than half the company for $500 million in September. At that time, some observers—including a certain Bloomberg Businessweek scribe—pointed out that the private equity firm seemed to be getting a shockingly good deal. That view seems to be confirmed now. If Apple has really bid $3.2 billion, the sum would be more in line with Beats’ worth, given the headlock the company has on the market for high-end headphones (and leaving aside the company’s new streaming service).