BestBuy music goes digital

Just a few days after we speculated on a Napster sale, BestBuy said it will pay $121m, or $2.65 a share, for the digital music service. This is an 80% premium from where the company was trading before the offer. After factoring in Napster’s cash and short-term investments, BestBuy paid just $54m, or 0.45 times Napster’s trailing twelve month revenue. A bargain by all means, but it remains to be seen whether BestBuy can do what Napster has failed to do for the past four years: Turn a profit.