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Apple, Be quarrel over money

Acquisition negotiations between Apple Computer and high-end operating software maker Be hit a snag following their first round of discussions over money.

Tech Industry

Acquisition negotiations between Apple Computer (AAPL) and high-end operating software maker Be have hit a snag following their first round of discussions over money, CNET has learned.

Apple's investment banker met with Be's key investors Friday to get down to brass tacks on an acquisition price, said a source close to the talks.

"We found we're very far apart, so it's entirely possible nothing will happen," the source said, declining to specify the size of the gap. Be executives are reportedly upset by the suggestion that Apple would pay cash only to Be investors but pay Be employees with Apple stock.

"We can't comment on rumors and speculation," said Russell Brady, an Apple spokesman.

Jean-Louis Gassée, Be founder, chairman, and chief executive, also declined comment. "My standard reply is that all rumors are always true," said the former president of Apple's products division.

Negotiations are still under way, however, despite this latest disagreement over price, according to another source close to the negotiations. It appears that the next move is for Apple to decide whether to offer more money for Be's operating system, which it would like to meld with its own Mac OS.

Meanwhile, Be is still moving forward with its plans by finalizing a memorandum of understanding with Mac clone maker Power Computing to license its Be OS, a source said.

The companies have already tackled the technology and organizational structure issues before moving on late last week and early this week into heavy-duty talks. For example, the two companies have already worked out a rough idea of how Apple would use Be's operating system and defined what role Gass?e and Be engineers would play at Apple.

"There was agreement that Be's team would remain at Apple for a few years to ensure a reasonable integration of the technology," said the source.

But none of that may be able to overcome the canyon-like gap that separates Apple and Be on price. Reportedly, Be's asking price is in excess of $100 million. Although everyone knows about Apple's losses earlier this year, analysts say there is still enough cash on hand to do a deal of that magnitude--if it wanted to.

Apple has said that it will announce another long-term operating platform strategy early next year, probably at the annual Macworld conference in January.

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