http://www.fool.com/News/mft/2003/mft03041104.htm
<font size="1">The Motley Fool rarely reports on rumor and speculation, but word in the Los Angeles Times that Apple Computer (Nasdaq: AAPL) is interested in buying Vivendi's (NYSE: V) Universal Music arm, the largest music producer in the world, is well worth pondering.
Why would a computer maker venture into an industry that has hit sour notes the last several years as earnings tanked under attack from the Internet? Last year, Universal Music's profit fell 23% to $510 million. Yet, Apple would reportedly offer $5 billion to $6 billion for the business, or about 10 to 12 times profits.
The answer to "why" may be, at its core, Apple's CEO and chairman, Steve Jobs, who has displayed strong personal interest in the entertainment industry for years. This is evidenced by his chairmanship of Pixar Animation Studios (Nasdaq: PIXR), his candid desire for Apple to better emulate Sony (NYSE: SNE) -- the music and entertainment giant -- the launch of Apple's iPod digital music player, and Mac's vigorous content applications. Word is that Vivendi approached Apple, but Jobs was probably all ears.
Since the late 1990s, the halls of Apple HQ have echoed with the notion that computer makers must become media owners if they're going to differentiate themselves. Plus, Apple is far more than a computer maker. Unlike Dell (Nasdaq: DELL), Gateway (NYSE: GTW), and others, it, of course, has the guts to write software. To compete with Microsoft (Nasdaq: MSFT), content and media applications are key.
Vivendi owns MP3.com and EMusic, while Apple is launching an online music service with backing from major record labels this month. If Apple indeed dips into its $4.4 billion in cash and equivalents to buy Universal Music, it will likely aim to: (1) create incremental music revenue from its existing Apple customer base; (2) work to discover the right mix of free and pay online music that maximizes profit; and (3) work even harder to draw Windows users to its unique media platform. None of these sounds easy.
Reportedly, Apple will make the offer by April 29. The only thing known for certain, though, is that debt-laden Vivendi is indeed looking to sell several divisions -- yes, even the one that has a contract with U2</font>