View Full Version : FENDER filing for an ipo. Does this make sense?
AEROSNIFF
03-08-2012, 09:57 PM
http://money.cnn.com/2012/03/08/news/companies/fender-ipo/index.htm?iid=HP_River
vortexxxx
03-08-2012, 10:54 PM
Sure. Why not?
Sweetfinger
03-08-2012, 11:04 PM
They've been working towards going public for years.
hoss33
03-08-2012, 11:10 PM
Then they can buy Gibson
Gene46
03-08-2012, 11:14 PM
Judging by the prices of their master built instruments, not to mention the long wait lists, I'd say yes.
Dewey Cox
03-08-2012, 11:37 PM
Then they can buy Gibson
:banana
hoss33
03-08-2012, 11:44 PM
:banana
Think about it. They are the other iconic American guitar maker and had some troubles lately.
tazzboy
03-09-2012, 12:06 AM
I'm surprise they are even doing it.
teleblaster
03-09-2012, 12:34 AM
There going to generate 200 million. 100 million to pay what they owe 100 million to new horizons, new markets. I would say smart move.
Mike9
03-09-2012, 05:11 AM
After the IPO goes through QC is bound to follow . . . right out the window.
hoss33
03-09-2012, 05:21 AM
After the IPO goes through QC is bound to follow . . . right out the window.
Here is the SEC filing. http://sec.gov/Archives/edgar/data/767959/000119312512101896/d293340ds1.htm
Going to markets in China, India in Indonesia,...
Certainly not with masterbuilt Custom Shop guitars.
TresGatos
03-09-2012, 05:25 AM
After the IPO goes through QC is bound to follow . . . right out the window.
Why? Shareholders WANT a product with a good reputation that earns them money.
I guess it's more fun to be negative though..... at least on TGP.
This is a carefully crafted way for the current owners to get their golden parachute and escape the mounting debt.
How many frigging Fender guitars are needed? I mean that with upmost honesty.
hoss33
03-09-2012, 06:48 AM
This is a carefully crafted way for the current owners to get their golden parachute and escape the mounting debt.
How many frigging Fender guitars are needed? I mean that with upmost honesty.
A new CEO of either Fender or Gibson should do the same at both companies:
Streamline the motherfooking product range!
Make 1-2 entry level, 1-2 main line and 1-2 custom shop vintage reissues of every model.
All the special models should go under different brand names.
Everything else confuses the customer.
Businesses should finally learn something from Apple.
Pietro
03-09-2012, 06:54 AM
A new CEO of either Fender or Gibson should do the same at both companies:
Streamline the motherfooking product range!
Make 1-2 entry level, 1-2 main line and 1-2 custom shop vintage reissues of every model.
All the special models should go under different brand names.
Everything else confuses the customer.
Businesses should finally learn something from Apple.
I don't think that works for guitars, though. Really, I don't. Too personal. You can buy an iPad and personalize it, but a guitar needs to be a bit personalized (neck shape, type of wood(s), pickups, trem) before you get it.
A new CEO of either Fender or Gibson should do the same at both companies:
Streamline the motherfooking product range!
Make 1-2 entry level, 1-2 main line and 1-2 custom shop vintage reissues of every model.
All the special models should go under different brand names.
Everything else confuses the customer.
Businesses should finally learn something from Apple.
I hear you! Both Fender and Gibson's biggest rivals for sales are used Fenders and Gibsons. It's created their need to diversify and create this mess of multiple models and variations.
hoss33
03-09-2012, 07:11 AM
I don't think that works for guitars, though. Really, I don't. Too personal. You can buy an iPad and personalize it, but a guitar needs to be a bit personalized (neck shape, type of wood(s), pickups, trem) before you get it.
I am with you on the personal thing.
Make a "classic" and a modern version in every price range, with different neck shapes.
The modern version can be ordered with various Pickup combinations (built to dealer order, along with the color).
In Fender's case: Who needs a Strat and Tele line from Mexico, US-Mex (Hwy-1), Special, US Std., US Vintage, Custom Shop, Time Machine,....
Add the new models from the Indonesian or Korean sites, and people get totally confused.
The used market is effected, too, because people don't know/don't trust where a guitar was actually made or what series it is coming from. Hurts the brand!
Mike9
03-09-2012, 07:20 AM
Why? Shareholders WANT a product with a good reputation that earns them money.
I guess it's more fun to be negative though..... at least on TGP.
I'm not being negative I'm pointing out a possible scenario. Depending on market flux the pressure to maintain rising value for shareholders means cutting costs. Interest rates are low and margins are slim these days. I bet you'll see Fender streamline its operation when performance becomes an issue. They already have a huge presence in the Asian markets I don't see that an IPO will make a bigger impact. :dunno
GreenKnight18
03-09-2012, 07:27 AM
I'm so glad we have all these armchair CEO types to share their well-reasoned opinions. Please continue.
Aaron Smith
03-09-2012, 07:30 AM
One of my very favorite things is reading threads about business on TGP. Continue, guys!
traviswalk
03-09-2012, 07:39 AM
This is a carefully crafted way for the current owners to get their golden parachute and escape the mounting debt.
How many frigging Fender guitars are needed? I mean that with upmost honesty.
No golden parachute, just a realization. And the debt (even pre-IPO) is going the other direction.
After the IPO goes through QC is bound to follow . . . right out the window.
Why?
As if private owners don't put pressure on management to cut costs, increase profits. Gibson is privately owned. Many publicly owned companies have very high quality products. It's a decision and policy that top level management decides on. Public or private companies - same decision.
Arewenotmen?
03-09-2012, 08:07 AM
Why?
As if private owners don't put pressure on management to cut costs, increase profits. Gibson is privately owned. Many publicly owned companies have very high quality products. It's a decision and policy that top level management decides on. Public or private companies - same decision.
Why, because once your go public, your company is owned by the stockholders who don't necessarily know anything about, say, guitars. The stockholders just want to see their 15% growth every quarter. IF the CEO knows what he's doing it might work, but from my experience in companies following an IPO, the cost cutting is much more rampant in the public sector.
Sure, good guitars will still be made, but that pressure to churn out product at slimmer margins will be more severe. In addition, from my experience, following an IPO a lot of the company's talent leaves becase either it is simply less enjoyable to work there anymore or the employees don't like feeling that their hard work is just going to pay the stockholders instead of feeding back into the company.
Just look at Norlin's reputation with Gibson guitars.
SinglecutGuy
03-09-2012, 08:10 AM
In Fender's case: Who needs a Strat and Tele line from Mexico, US-Mex (Hwy-1), Special, US Std., US Vintage, Custom Shop, Time Machine,....
Add the new models from the Indonesian or Korean sites, and people get totally confused.
Only the FEW guitar players who are picky?
golfnutt67
03-09-2012, 08:10 AM
After the IPO goes through QC is bound to follow . . . right out the window.
That was my first thought too
patentcad
03-09-2012, 08:13 AM
PRS has Private Stock.
Fender has Public Stock.
You're less likely to lose money on the former. Carry on.
golfnutt67
03-09-2012, 08:14 AM
I'm so glad we have all these armchair CEO types to share their well-reasoned opinions. Please continue.
:) ;) :)
tkozal
03-09-2012, 08:19 AM
The press doesnt say how much of the company is being taken public. It doesnt look like the whole thing, existing owners will likely be in firm control.
A new CEO of either Fender or Gibson should do the same at both companies:
Streamline the motherfooking product range!
Make 1-2 entry level, 1-2 main line and 1-2 custom shop vintage reissues of every model.
All the special models should go under different brand names.
Everything else confuses the customer.
Businesses should finally learn something from Apple.
I guess that's why IKEA is the worlds largest furniture manufacturer, because they chose to make only one type of desk and one type of chair...
What works for one industry does not always translate across markets.
SinglecutGuy
03-09-2012, 08:59 AM
I'm not in the business world, so I apologize for not knowing the answer to this question...
What is the main benefit for Fender to go public, and what is the main detriment to the the public (musicians who buy Fender product) if they do this?
I would think going public would allow people like myself to invest in Fender, and contribute to their capital flow to increase their product line, invest more in their product line, and ultimately have more cash flow to build more/better guitars.
Now I'm sure if you get some greedy bastards that invest a lot of money in the company, they're try to strong arm some decisions so that it solely becomes a profit at no matter what the cost scenario, but wouldn't Fender make sure this doesn't happen to protect their reputation in the industry?
hoss33
03-09-2012, 09:36 AM
Another positive aspect: Stock options for employees are usually a good incentive.
Pietro
03-09-2012, 10:06 AM
PRS has Private Stock.
Fender has Public Stock.
You're less likely to lose money on the former. Carry on.
Cute statement... but...
PRSi seem to really take a bath on their value used moreso than Fender Custom Shop instruments, don't they?
patentcad
03-09-2012, 11:39 AM
Cute statement... but...
PRSi seem to really take a bath on their value used moreso than Fender Custom Shop instruments, don't they?
I'm not sure that's true, but even if it is, I was comparing Fender stock to PRS guitars. There aren't too many $5K + guitars you can buy new that have great resale value in the short to medium term. If Fender Custom Shop guitars have higher resale value (quite arguable) it's probably because they're cheaper.
patentcad
03-09-2012, 11:46 AM
I guess that's why IKEA is the worlds largest furniture manufacturer, because they chose to make only one type of desk and one type of chair...
What works for one industry does not always translate across markets.
KISS
Keep It Simple Stupid
This applies to all business, not just Ikea. Fender and Gibson should review this simple concept. Their confusing product offerings are rather silly, and I'm quite confident that both companies could pare their lines by 30%, lower costs, reduce confusion and improve their sales. When Steve Jobs came back to Apple the first thing he did was cull the Mac line from two dozen models to 6. So you knew that Steve got it. Many companies got it, still get it, maybe Fender will some day too.
StratStringSlinger
03-09-2012, 11:52 AM
I can't believe no one already coined 'Fender Pre-IPO'!
b3john
03-09-2012, 12:40 PM
A new CEO of either Fender or Gibson should do the same at both companies:
Streamline the motherfooking product range!
Make 1-2 entry level, 1-2 main line and 1-2 custom shop vintage reissues of every model.
All the special models should go under different brand names.
Everything else confuses the customer.
Businesses should finally learn something from Apple.
If Fender and Gibson only sold a set range of guitars, I literally wouldn't own any Fender or Gibson guitars. Congratulations on converting paying customers into non-customers.
And different brand names? You want to take brand names off products from the two truly iconic guitar builders?
Another positive aspect: Stock options for employees are usually a good incentive.
Not necessarily. They can encourage short-term stock price performance over long-term success.
Stock options also assume stock price appreciation, and Fender lost a LOT of money in the year ended 1/2/2011: FMIC's Form S-1 (http://sec.gov/Archives/edgar/data/767959/000119312512101896/d293340ds1.htm)
A couple of other interesting bits of information in that filing is that Guitar Center is responsible for 15% of their net sales while carrying a Caa2 credit rating (pp. 21-23) and that Fender's Asian operations are almost completely outsourced to OEMs (instead of being owned by FMIC or it's subsidiaries). (pp17-18).
I can't believe no one already coined 'Fender Pre-IPO'!
They did, over in the other thread (http://www.thegearpage.net/board/showthread.php?t=1046616).
hoss33
03-10-2012, 11:36 PM
The SEC filing is an interesting read, check out the risk factors:
GuitarCenter seems to be in big financial troubles.
Fender also fears a "wood raid" like it happend to Gibson.
stilesg57
03-11-2012, 12:39 AM
^^^ Wonder if they actually fear it, or if they just have to mention it.
I got to work on the "Market Risk Factors" portion of a PPM for a company this summer. We had to put in things that didn't really apply to us just because of the perception that they might.
The stuff on Guitar Center is interesting though. They're pushing pretty hard to hire MBAs at the moment too. Hmmm....
sondich
03-11-2012, 01:14 AM
The SEC filing is an interesting read, check out the risk factors:
GuitarCenter seems to be in big financial troubles.
I haven't read the SEC filing yet but I'm interested in reading the particulars.
I don't want it to tank but I'm skeptical that the IPO will line anyone's pockets. Unless I'm missing something, there's no huge growth potential lurking around the corner. They have a great brand but presumably they've been unable to sell it privately to anyone who would most likely be interested in it. A mature business with tons of administration and lackluster financials doesn't exactly remind me of Amazon.com. 10-15 years ago, the IPO-buying public may have been willing to overlook most of these issues.
I'll be following with interest.
Guitarworks
03-11-2012, 07:59 AM
I can't believe no one already coined 'Fender Pre-IPO'!
Oh, I'm sure the day is coming when someone will try to use it as a selling point, even if it means nothing.
Elliott Damage
03-11-2012, 08:19 AM
Here is the SEC filing. http://sec.gov/Archives/edgar/data/767959/000119312512101896/d293340ds1.htm
Going to markets in China, India in Indonesia,...
Certainly not with masterbuilt Custom Shop guitars.
i read it.
yup, they're looking to move into other countries. Most of their revenue is from Asian made guitars. They want to be a 'lifestyle' brand...so I guess they'll be slinging their t-shirts and coffee mugs and other bullshit. I didn't know they owned Hamer.
shareholders don't give a damn about quality products. They care about profits. :wave:wave
i think fender should mix some carvin influence in their guitars, and you should be able to build your own am. standard instrument with a hodge podge of parts. say bottom line would be 600$ u.s. while the more customized options bring up the price.
that would generate more money than anything. people enjoy a custom instrument more than a custom shop instrument that doesn't really fit all their specs....
edit: if they still kept all the signature guitars, and kept a few of the am. standards (most purchased or most popular), they would round out the mid to mid high end market. because then people could get what they really wanted for a budget. sure, the parts and wood wouldn't be stellar compared to a 5k$ luthier instrument, but it'd still be what they want.
customer demand and whatnot.
trickness
03-11-2012, 09:17 AM
I for one think it will ultimately end up being a really bad thing.
Being a public company means Fender will have to be more focused on quarterly performance than ever before. Wall Street only cares about maximizing profits and lowering costs to achieve consistent growth. That means more products made in Asia, and less American jobs. It also means they'll have inevitably have people at the top who care a lot less about music and heritage than they do about the bottom line.
Too many privately owned companies who've gone public have ended up this way. I hope Fender is the exception to the rule, but it's really hard to have a soul when you are answering to Wall Street every quarter.
tim gueguen
03-11-2012, 09:37 PM
i think fender should mix some carvin influence in their guitars, and you should be able to build your own am. standard instrument with a hodge podge of parts. say bottom line would be 600$ u.s. while the more customized options bring up the price.
that would generate more money than anything. people enjoy a custom instrument more than a custom shop instrument that doesn't really fit all their specs....
That wouildn't work with the size of plant and the production numbers Fender currently has in the US, nor for that matter with their current dealer network. Note that Carvin doesn't have a dealer network and produces guitars in far smaller numbers, making their "semi-custom shop" way of operating viable.
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