What's Going On At Gibson??

Discussion in 'Guitars in General' started by DrumBob, Dec 16, 2009.


  1. DrumBob

    DrumBob Gold Supporting Member

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    I spoke today with my good friend Phil, who manages the guitar department for the biggest indie music store on the east coast. He told me that Gibson is NOT attending winter NAMM this year. They didn't attend summer NAMM either, and it was right in their backyard in Nashville.

    Also, Phil is buying up every single custom shop and one-off guitar he can from Gibson right now, and that their inventory is down to almost zero.

    Something big is going on. Phil thinks Peavey is poised to buy King Henry out, and he thinks it might be a disaster, as Peavey stuff doesn't sell very well in his store, putting a negative connotation peoople's minds, i.e., what happened when CBS bought out Fender in '65.

    I guess we'll see what happens.
     
  2. webe123

    webe123 Member

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    Well I think your friend is dead wrong about Peavey buying Gibson!

    I think it would FINALLY be run right with someone at the helm that would concentrate on quality control!

    I also think that Hartley Peavey could do a much better job selling Gibson's than Henry ever could!

    But of course all of this is pure speculation....I will not believe anything until I see some official statement saying that Peavey has bought Gibson. Until I see FACTS proving otherwise.....it is just a rumor...nothing more.

    There was a rumor going around that Music Man had started to endorse Johnny Hiland because he quit PRS over a contract dispute! But that was a COMPLETE LIE!

    The owner of Music Man guitars said he NEVER EVEN MET Johnny Hiland and certianly never discussed any sig guitar with him!

    False rumors can be started by any idiot, but it usually takes a lot to stop one........even if it is false.

    I am going to wait and see if this is true or not...and THAT will be when I hear Gibson's official side of the story.
     
  3. FredW

    FredW Member

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    If the inventory is almost at zero, that is probably a very good thing in this environment! I have some good friends close to the situation and the peavey thing is rediculous. There are some of other big guitar companies that are choking on inventory they can't move.
     
  4. DonW

    DonW Velocity Town Angel Silver Supporting Member

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  5. SgtThump

    SgtThump Member

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    I don't know the real reasons, but in this economic environment, it may be a wise decision not to attend trade shows. I know other companies that are doing this as well (the company I work for, actually.) I assume that attendance at trade shows, both by companies with exhibits and actual attendees, is lower now than normal. At least, I would expect it to be with companies trying to save money on "non-essential" things.
     
  6. Trebor Renkluaf

    Trebor Renkluaf I was hit by a parked car, what's your excuse? Gold Supporting Member

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    The past few NAMMs I attended Gibson had a private booth - if you weren't a Gibson dealer, you couldn't get in. Perhaps they realized it's less expensive just to talk with their dealers rather than meat face to face at NAMM. They were at last years CES show, don't see them listed this year. No great loss imho, and yes Hartley Peavey would do a far better job of running Gibson than Henry does.
     
  7. blood5150

    blood5150 Member

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    What store in jersey? Do I not know of a cool store around here?
     
  8. guitarfish

    guitarfish Member

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    Phil at Alto Music in Middletown, NY. Excellent store, I bought my LP there. I don't "know" Phil but I've talked to him a few times and he's as knowledgeable as they come about the business I think.

    I don't know what's going on at Gibson, but it doesn't look promising at the moment.
     
  9. Tone_Terrific

    Tone_Terrific Member

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    So, Hiland leaves PRS.....MM emerges as a contender....OF COURSE they deny, deny...holding back critical info...smells of conspiracy...Gibson is being eyed by offshore interests....you can bet on it!....we'll never know because they have to be secret...I have listened to late night talk radio and KNOW how this stuff works....Area 51...61 etc...2012...666...
     
  10. Marble

    Marble Member

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    Damn I better buy my Zoot suit while I can.
     
  11. charveldan

    charveldan Senior Member

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    Hartly has tried this every year for a decade, it's mere speculation.

    Peavey used to make ok stuff for the working class, but like everything they make it becomes mass produced junk over time.:munch
     
  12. barryg_nyc

    barryg_nyc Member

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    The Peavey-Gibson rumors have been around for a few months (in fact, you can see when Henry felt obligated to deny them here). There was a long thread on this at TGP about a month ago.

    As other posters have pointed out, in a down economy, trade show budgets are among the first to get cut.
    When you look at the changes to Gibson's business (with Guitar Center accounting for a large portion), NAMM may not be as big a deal for them as it once was. They have a captive audience and can reach out to their dealer channel in other ways to drive awareness of new products. Or, perhaps they were ashamed to show up with the Dusk Tiger and the Jimi Hendrix model.

    That said, Gibson is struggling in this economy. Their debt was downgraded by Moodys this fall (see full text below) and I could definitely see them getting acquired if they have continued weakness. If this were 3 years ago, the acquirer might be a private equity firm (as when Bain acquired GC) but in this economy, it's hard for the financial buyers to do the financing, so they would be more likely acquired by a strategic buyer; hence, the long-running Peavey rumour resurfaces.



    Here's the Moodys announcement:
    [FONT=verdana,arial,helvetica]New York, October 27, 2009 -- Moody's Investors Service downgraded Gibson Guitar Corp.'s corporate family rating to B3 from B2 largely due to Moody's expectation of weaker than expected 2009 operating performance versus 2008. At the same time, the probability of default rating was downgraded to Caa1 from B3 and the rating on the senior secured credit facility (term loan and revolver) was downgraded to B3 from B2. The ratings are on review for possible further downgrade. Although subject to change, the LGD assessments are not on review.
    The one notch downgrade in the corporate family rating to B3 from B2 reflects the company's expected diminishing operating performance in 2009 versus 2008 and Moody's view that operating performance will likely continue to be pressured for the near term. The downgrade also reflects Moody's concern over Gibson's continuing delay in issuing its 2008 audited financial statements and the risks associated with the company's corporate governance structure.
    "The review for downgrade reflects Moody's concern over Gibson's liquidity position as the company no longer has access to its revolving credit facility because of the delay in issuing its financial statements by the waiver deadline" said Kevin Cassidy, Senior Credit Officer at Moody's Investors Service. The review for downgrade also reflects Moody's concern about the company's ability to comply with financial covenants over the next few quarters as the covenants contractually adjust.
    Moody's review will focus on the company's liquidity position, including the cushion for covenant compliance and operating cash flow.
    [/FONT]
     
  13. JPERRYROCKS

    JPERRYROCKS Member

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    Low inventory can be good.

    U want higher resale on your guitars.

    High end guitars are dead for a lot of stores right now

    But on the down side, if you're not shipping guitars, where's the $$ coming in? You can only do that for so long.
     
  14. shane88

    shane88 Member

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    all lies > gibson has already been bought by a mr fong and in 2010 all production will be moved to china
     
  15. Telecaster069

    Telecaster069 Member

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    Wouldn't it be ironically awesome if Heritage bought out Gibson!
     
  16. Marble

    Marble Member

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    It would be awesome if Heritage bought the name of Gibson! Back in Kalamazoo, where they belong!
     
  17. jmoose

    jmoose Supporting Member

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    I heard from a couple friends in the MI supply side of things that Gibson was hit pretty hard by the financial credit crunch that got everyone in early '09...

    They laid off a few hundred people this year, due in part to falling sales & shrinking market share. One report I saw said sales were down 20% or better.

    A lot indie dealers have moved to other brands because of the commitments. The guitar shop 10 minutes (Ritchie's Music in Rockaway NJ) from my house dropped 'em because it was $100k a year, guaranteed or nothing at all. Gibson wanted 'em to take new pieces, yet they had "new" Lesters that were total dogs hanging on the wall for 3 years.

    They're stocking Heritage guitars now...

    I've also heard, and this is old news... that the Peavey buyout was done & not going to happen. Hartley said something along the lines of "see you in bankruptcy, I'll get a better deal anyway."

    Then, roughly a month ago one of the factories was raided by feds...

    http://www.premierguitar.com/Magazi...ties_Raided_by_Law_Enforcement_Officials.aspx

    So really, who knows.

    Though its usually not a good sign when companies skip major trade shows...
     
  18. Tadams

    Tadams Silver Supporting Member

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    They should allow dealers to post actual pics of the guitar.
    That should help business.
    I hope they don't because I'd spend too much money.
     
  19. slider

    slider Member

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    I think the opposite is true- Peavey stuff has improved in quality. They have boutique-level guitars and amps, at boutique-level prices. The 'Classic' tube amps and Foundation basses are solid, inexpensive products.

    For me and a lot of people, Peavey still has the stigma and stank of when it was a lower-quality brand. I might get one, and quickly remove the logo.

    Gibson created their problems: high prices, poor QC.
     
  20. BrentB6

    BrentB6 Member

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    Totally agree. The Classic series of amps are made well and sound as good or better than my JMC 800.
     

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