If you can read this, either the style sheet didn't load or you have an older browser that doesn't support style sheets. Try clearing your browser cache and refreshing the page.

(Marketwatch)   No Stairway... denied   (marketwatch.com) divider line 3
    More: Followup, IPO  
•       •       •

3494 clicks; posted to Business » on 20 Jul 2012 at 10:27 AM (2 years ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



Voting Results (Smartest)
View Voting Results: Smartest and Funniest


Archived thread
2012-07-20 10:40:52 AM
3 votes:
Good. Going public would be a terrible decision for Fender. If they did, within five years we'd see them for sale at Wal-Mart. An IPO is usually an act of desperation only good for raising a bunch of money fast; after that it's nothing but trouble, and it does nothing address the core issues which led to your decision to go public. Your activities are now focused on regulatory compliance and cutting whatever corners you can to get your EPS up half a cent. Workmanship and customer loyalty go out the window, and the sociopaths in finance and marketing take over every aspect of the business.
2012-07-21 10:25:58 AM
1 votes:
I know this thread is dead, but here is a really good analysis from Fortune on why Fender pulled it. A lot of purists think this is a good thing and will preserve the craft, but in reality, like I said earlier, it's a sign of systemic trouble in the industry (the one in which I happen to have a 10-year career). I fight this fight every single day...

One commenter hits the nail on the head:

"I work in the musical instruments (MI) industry (specifically the guitar industry) and I can say it's in a world of hurt right now. I travel to Asia on a regular basis working with the OEM factories as well as artists and dealers in the US and everyone is hurting. No one is really making any money - from Guitar Center down to the small mom-and-pop stores that are disappearing every day.

It's a very small industry - a little over $10 billion when you combine all the MI manufacturers' annual revenues in the entire industry. To provide a perspective, Apple makes more in just net profits in three months. And, in an indirect way, Apple and the rest of the consumer electronics industry have decimated the MI industry as well as the music business (CD sales, music distribution, concert circuit, etc.).

Even a very low-end electric guitar and an amp will set a family back at least $300. But then you have to provide lessons for them at $25/half-hour and that adds up really fast over a year or two. You might as well buy the kids an iPod touch or even an iPad and call it a day. Plus, kids these days just don't have the patience or the self-discipline to practice musical instruments for years on end when there are so many other types of distractions and entertainment that provide instant gratification.

Major MI companies such as GC, Fender, Gibson, etc. overextended themselves during the 2000's, thinking that they will continue to grow as they did during the booming 90's. Now there are too many GC stores, too much factory capacity, and just not enough demand. Then you add the global economic turmoil of the past 4 years or so and the MI industry has a major financial mess in its hands.

I think this industry has no choice but to go through a very painful cost-cutting phase over several years and accept the fact that it will not become "mainstream" like it tried to be over the past decade. They tried to stuff musical instruments (specifically guitars) down mass merchandiser channels like Walmart, Target, Best Buy, Costco, Bed Bath & Beyond, etc. and it just hasn't worked.

And as others have pointed out, most musical instruments (especially guitars) aren't disposables and they don't become obsolete like tech gadgets. Even a cheap guitar can last decades so the used market is huge so the manufacturers of new instruments have to compete with people (individuals and dealers alike) selling used gear.

So things look rather grim in this industry right now and I don't see it getting better anytime soon. It'll get worse over the next few years before it gets better. But it will survive in a different form. People will always want to play music but it'll be a very niche field. The manufacturers have to accept that they're in a niche market and do business accordingly instead of trying to become all things to all people. The vast majority of people in this world will not be seeking to play an electric guitar..."


BTW, Thunderstruck and Eruption are the two most butchered pieces kids come in to riff on in my store. I've got videos that would make you pull your hair out.
2012-07-20 11:41:46 AM
1 votes:

Harvey Manfrenjensenjen: Good. Going public would be a terrible decision for Fender. If they did, within five years we'd see them for sale at Wal-Mart. An IPO is usually an act of desperation only good for raising a bunch of money fast; after that it's nothing but trouble, and it does nothing address the core issues which led to your decision to go public. Your activities are now focused on regulatory compliance and cutting whatever corners you can to get your EPS up half a cent. Workmanship and customer loyalty go out the window, and the sociopaths in finance and marketing take over every aspect of the business.


Modern IPO's have very little to do with raising funds. They are more about repatriating funds to those who provided the capital when fundraising was necessary.
 
Displayed 3 of 3 comments

View Voting Results: Smartest and Funniest


This thread is archived, and closed to new comments.

Continue Farking
Submit a Link »






Report