By Richard Menta 9/15/08
Back in July rumors were circulating in financial circles that Napster was ripe for the plucking. Today, Best Buy announced that it has acquired Napster for $121 million.
As Wall Street reels from last night's announcement that Lehman Brothers has bitten the dust, Best Buy picked up the digital music company for $2.65, double its $1.36 close on Friday. The purchase of Napster gives Best Buy access to 700,000 digital media subscribers that it hopes to cross-sell other electronic and digital items to in the future. In a statement Best Buy President Brian Dunn said, "Best Buy intends to use Napster's capabilities and digital subscriber base to reach new customers with an enhanced experience for exploring and selecting music and other digital entertainment products over an increasing array of devices,"
Napster lost $4.4m in it's most recent quarter on revenue of $30.3m. The company did have some $65 million in cash, more than what the stock was valued at back in mid-summer. Best Buy's job is now to turn that loss around. As Best Buy is also closely linked to SanDisk, the number two seller of Digital media portables, one wonders what synergies the acquisition will bring to those three companies. Hopefully, they will be able to stimulate growth for Napster, which has remained stagnant these past two years.
The Archos 5 series Internet Media Tablet is available on Amazon