Those employees were given options at Apple ($80M worth) that were probably lost once they left the company to work at Color. Then Apple ended up getting them back on the cheap. So instead of $160M, Apple ended up paying $80M + $7M.
One could also say that it was an employee retention disaster. Apple could not keep their key engineers happy even after offering millions to stay.
After realizing the full extent of the engineers' value after the fact, Apple had to buy a company that had no viable product just to get the engineers back.
They bought Lala. The sought-after employees left even after being offered a $80M golden leash.
They were bought again with Color. What stops these employees from leaving again, with a much less lucrative golden leash this time around?