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Apple trims Beats price to $3 billion, report says

Now that Apple has completed its due diligence, the New York Post says, it apparently thinks Beats is worth a little less than anticipated.

Beats Electronics CEO Jimmy Iovine. Dan Farber/CNET

Update, 1:42 p.m. PT: Apple has confirmed that the company is purchasing Beats for $3 billion.

The purported saga between Apple and Beats Electronics has taken a slightly more frugal twist.

Earlier this month, the Financial Times reported that Apple was planning to acquire Beats for $3.2 billion. Now, however, it seems the price will be an even $3 billion when Apple this week finally announces that it is acquiring the music device maker, the New York Post is reporting, citing people who claim to have knowledge of its plans. The Post's sources didn't say exactly when the acquisition might be announced.

At the time of the earlier report, apparently, Apple had yet to complete its due diligence -- the process of digging into a target company's financials and business activities to arrive at a valuation -- and has since completed that process and discovered Beats to be worth less than anticipated, according to the Post's sources. Apple was particularly concerned about Beats' streaming-music service, which has only 11,000 subscribers.

Less than a decade old, Beat already has a somewhat tangled investment history. It was founded in 2006 by rap artist Dr. Dre and Interscope Records chairman Jimmy Iovine. The company initially produced headphones that delivered improved sound quality over Apple's popular earbuds.

In August 2011, mobile device maker HTC acquired half of Beats for $309 million. Just a year later, however, HTC sold back half of its stake to Beats and then unloaded the next half last year, leaving the company back in the hands of its founders.

With HTC out of the way, Beats continued its meteoric rise in the audio space, selling an increasing number of headphones, and earlier this year launching Beats Music, a subscription-based music-streaming service aimed at improving the relevance of tracks users were listening to based on their tastes.

If Apple were to acquire Beats at $3 billion, it would be the biggest acquisition the company has ever made. Some analysts suggest that Apple is after Beats' audio technology and its engineers to enhance the overall quality and "coolness" factor of its audio products. Earbuds, after all, have lost some of their mojo since Beats has come along.

Another possibility is Apple's desire to get its hands on the creative minds of Jimmy Iovine and Dr. Dre. Reports this month have suggested that both men could join Apple in creative roles to help Tim Cook in future decisions. Dr. Dre appeared to confirm rumors of the buyout in a video posted to Facebook that was later removed.

For its part, Apple has remained tight-lipped on anything related to Beats. The company won't comment on whether it's looking at a deal and has sidestepped any discussions over the possibility of Iovine and Dr. Dre joining Apple.

CNET has contacted Apple for comment. We will update this story when we have more information.