Confusion reportedly leads to exaggerated numbersOn some fronts, it is believed Apple spent as much as $80 million on the recently closed Lala deal. However, others firmly uphold Lala was, in fact, purchased for $17 million by Apple. With the music-streaming company holding around $14M in cash at the time of the acquisition, reports suggest, the Mac maker supposedly spend a meagre $3M on Lala. Neither Lala, nor Apple have commented on these claims yet.
Citing “sources with indirect knowledge of the deal [Lala] supposedly had $14 million in cash in the bank, meaning the actual purchase price was really $3 million,” Tech Crunch reports. “LaLa has raised $35 million and was valued at $180 million or so in it’s [sic] last round of funding,” the analysis goes. “The reason for the misreports on the $80 million sale may have to do with those numbers,” Tech Crunch, which seems pretty good at crunching numbers too, says.
“We’ve heard that the purchase price was ‘forty or fifty cents on the dollar’ from one source, meaning 40% or 50% of the $35 million in venture capital the company has raised,” the report continues to reveal. “But a misunderstanding of what that means could easily have people thinking it was 40% or 50% of the last round valuation, which gets you the $80 million number,” what seems a fair justification of reports saying Apple has spent $80 million on startup Lala goes.
Believed to have been acquired mostly for its housed engineering talents, Lala also struck a deal with Google recently, making it even more attractive as an asset. Whether iTunes may or may not end up in the cloud, “$3 million for top-of Google music results and a top team of engineers makes a lot of sense,” the Tech Crunch report concludes. The site adds that Lala has been playing hard to get since the Apple acquisition, but promises to get its sources to leak more on this burning subject.