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Fender to file an IPO!

Thunderchicken

Thunderchicken

Sep 15, 2002
177
1
Near the Mouse in Orlando
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#1
(Reuters) - Fender Musical Instruments Corp, whose guitars have been used by music legends Jimi Hendrix, Eric Clapton, Mark Knopfler and Pink Floyd's David Gilmour, filed with U.S. regulators on Thursday to raise up to $200 million in an initial public offering.

Formed in the 1940s by Leo Fender, Fender was the first to mass-produce solid-body Spanish-style electric guitars, including the iconic Stratocaster.

It was sold to television network CBS in 1965. When CBS started selling off its non-media businesses, then Fender Chief Executive William Schultz teamed up with some of the company's international distributors and bought out Fender in 1984.

Schultz and his family trust still own about 6 percent of Scottsdale, Arizona-based Fender, according to the company's filing with the Securities and Exchange Commission.

Private equity firm Weston Presidio owns a 43 percent stake.

"Fender is using a window of opportunity here to get into portfolios of funds that look for strong brands," Josef Schuster, founder of Chicago-based IPO investment firm IPOX Schuster, told Reuters.

"It is a leader in its field. I think there will be demand for its stock."

J.P. Morgan, Baird, Stifel Nicolaus Weisel and Wells Fargo Securities would be underwriting the offering, Fender said in the filing. The company plans to use about $100 million of the proceeds to pay off debt.

Since part of the debt repayment will be made to some of the banks underwriting the offering, Financial Industry Regulatory Authority (FINRA) regulations require the offering to have a qualified independent underwriter, the filing said.

William Blair & Company would act as the independent underwriter in the offering.

The number of shares to be offered -- a portion of which will be sold by some stockholders -- and the price range for the offering have not yet been determined, Fender said.

The company, which had net sales of $700.6 million in the fiscal year ended January 31, said it plans to apply to list on the Nasdaq under the symbol "FNDR."

The amount of money a company says it plans to raise in its first IPO filings is used to calculate registration fees. The final size of the IPO could be different.
 
#2
HA! And that is the beginning of the end! So long Fender. It was good while it lasted. Now you're headed back down the road of CBS and worse. Pressure to provide value to stock holders will most likely sap any remaining quality out of this product and send it the way of the Detroit auto-makers like Chrysler, DeSoto, Hudson, AMC...blah, blah, blah... :spit:
 
#4
I read "The company said on Thursday that its net revenue climbed to about $700 million in the 2011 fiscal year, up from $617 million in 2010. Fender swung back to a profit last year, reporting net income attributable to common stockholders of $3.2 million, compared with a $17.3 million loss in 2010."

$700M revenue vs $3.2 income. That means Fender is operating on, what, about a .46% profit margin? Does that seem right? I googled Apple and they run on a 28.20% profit margin.
 
#5
Duuuuuuuuuude said:
I read "The company said on Thursday that its net revenue climbed to about $700 million in the 2011 fiscal year, up from $617 million in 2010. Fender swung back to a profit last year, reporting net income attributable to common stockholders of $3.2 million, compared with a $17.3 million loss in 2010."

That means Fender is operating on, what, about a .46% profit margin? Does that seem right? I googled Apple and they run on a 28.20% profit margin.
Click to expand...

Lol! Not over a two year average- means they are still in the red 14 mil from the previous year in realistic terms.

Think- you LOST 17 mil last year, but this year you made expenses and 3 mil above expense- your creditors still want to see that 14 mil.
Translation? Fender is still broke but they're not nearly as broke as they were last year!
They need that IPO to get their heads above water they're still sinking!
 
#6
Duuuuuuuuuude said:
I read "The company said on Thursday that its net revenue climbed to about $700 million in the 2011 fiscal year, up from $617 million in 2010. Fender swung back to a profit last year, reporting net income attributable to common stockholders of $3.2 million, compared with a $17.3 million loss in 2010."

That means Fender is operating on, what, about a .46% profit margin? Does that seem right? I googled Apple and they run on a 28.20% profit margin.
Click to expand...

From where I sit, Fender has three big problems, business wise:

- A deserved rep for shoddy QA. This isn't helped by Squier's success with the CV/VM models, which by many accounts equal or outclass MIM Fenders.

- Stagnation. P and J basses haven't fundamentally changed since before I was born, including their flaws. How long has the infamous Fender Dead Spot been with us now? Come on, Fender...it's time to update the designs a bit.

- Too many different models of the same few instruments, which certainly have no sonic difference to a typical audience, and often have little perceptible difference even to musicians. This raises production costs, while a lot of instruments are left on the store walls because there is no point in buying a more expensive model that feels and sounds pretty much the same as one that costs less.
 
#7
nukes_da_bass said:
Lol! Not over a two year average- means they are still in the red 14 mil from the previous year in realistic terms.

Think- you LOST 17 mil last year, but this year you made expenses and 3 mil above expense- your creditors still want to see that 14 mil.
Translation? Fender is still broke but they're not nearly as broke as they were last year!
They need that IPO to get their heads above water they're still sinking!
Click to expand...

Why do you assume they borrowed all of the funds necessary to cover the loss?
 
#8
Here is the filing they did with the SEC:

Invalid Link Removed

Here is what they list as "Risks related to our business." It seems like many of their risks are associated with their foreign manufactures (OEMs)


•
Recent difficult economic conditions have adversely affected consumer purchases of discretionary items, such as our products, and may continue to harm our business and results of operations.

•
We derive a substantial portion of our net sales from Europe, and the financial crisis in Europe could significantly harm our business and results of operations.

•
Our ability to increase our net sales will depend in large part on growth in the markets for our products.

•
If we are not able to accurately forecast demand for our products, our business and results of operations would be harmed.

•
If we are unable to anticipate and respond to changes in consumer demand and trends, our net sales, business and results of operations would suffer.

•
Any delay in the delivery of our products to customers could harm our business and results of operations.

•
We depend on OEMs for production of a significant portion of our products. If we are unable to maintain these manufacturing relationships or enter into additional or different arrangements as needed, our net sales would suffer.

•
Any disruption we experience at our manufacturing facilities or our distribution system or any disruption at our OEMs could hurt our ability to deliver our products to customers.

•
Our OEMs may not continue to produce products that are consistent with our standards, which could damage the value of our brands and harm our business and results of operations.

•
Any disruption in the supply of raw materials and components we and third parties need to manufacture our products could harm our net sales.

•
We may be subject to the enforcement of regulations and laws relating to the importation and use of certain raw material, which could adversely affect our ability to use certain raw materials and harm our business.

•
We depend on our relationships with dealers and their ability to sell our products, and one dealer is responsible for a significant percentage of our net sales. Any disruption in these relationships could harm our net sales.

•
For sales in some countries outside the United States, we rely in part on third party distributors and are subject to the risk that these distributors may not effectively sell our products.

•
We are subject to credit risk associated with our largest customer.
 
#9
NortyFiner said:
- A deserved rep for shoddy QA. This isn't helped by Squier's success with the CV/VM models, which by many accounts equal or outclass MIM Fenders.
Click to expand...

I don't think it's really all that deserved at all. It seems like they get more of a bad rep from store's not taking care of their stock than actual QA issues. Also people on TB are a small fraction of the actual bass buying public. Most people consider Fender and Gibson to still be top of the music maker heap.

NortyFiner said:
- Stagnation. P and J basses haven't fundamentally changed since before I was born, including their flaws. How long has the infamous Fender Dead Spot been with us now? Come on, Fender...it's time to update the designs a bit.
Click to expand...

Fender has many times tried to bring in new designs and ideas and guess what. They didn't sell. Fender makes the same old designs because that is what sells. Even Musicman eventually brought out a reissue (something they said they would never do) because people like the old designs.

NortyFiner said:
- Too many different models of the same few instruments, which certainly have no sonic difference to a typical audience, and often have little perceptible difference even to musicians. This raises production costs, while a lot of instruments are left on the store walls because there is no point in buying a more expensive model that feels and sounds pretty much the same as one that costs less.
Click to expand...

This I agree with 100%. Offer the vintage line and then a standard Jazz and Precision. Instead of making 1000 different model variations just allow options. A Precision with choice of neck width and if you want an optional jazz pickup. That way you just order it that way rather than bringing out a Precision Special Deluxe II.
 
#10
Ask a group of people whats wrong with Fender. One half will tell you they spend too much time focusing on antiquated designs from the 60s. The other half will tell you they spend too much time focusing on new developments that rarely go anywhere. Its Awesome..
 

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