Relentless analysts say the deal cost too much, headphones won’t make much difference

May 29, 2014 14:49 GMT  ·  By

Regardless of what Apple does these days, you can’t convince anyone that they’re doing the right moves. Tim Cook is too slow, iPhone 5c doesn’t sell, their music business is in the gutter, and iPhone has lost its flair.

But pick any one of the company’s last four quarters and the earnings will tell you a completely different story. Apple’s calculated approach yields insane profits every year, yet Wall Street is worried Apple’s spending is not in the investor’s advantage. Take this little nugget of financial thinking from Dan Niles, chief investment officer of hedge fund AlphaOne Capital Partners:

“To see this kind of money spent for a company that gets most of its revenue from hardware business is not what we want to see.”

Newsflash Mr. Niles, Apple bought a bunch of really talented people yesterday, not headphones. Acquiring a specialized tool (brains, in this case) vests over time, making it a good investment no matter how you look at it.

And here goes Patrick Becker Jr., portfolio manager at Becker Capital Management, relaying his own dismay at Apple’s decision to make strategic acquisitions with its huge cash reserves:

“We never like to see a company buy something for $3 billion [€2.2 billion] when a few months ago it was worth about $1 billion [€734 million]. We wonder whether this is an appropriate use of shareholder cash.”

I wonder who valued Beats at $1 billion (€735 million). It surely wasn’t Wall Street, was it?