Fender IPO

[dhsierra1]

this does not bode well for the quality of their products IMHO, what w/the mantra of "enhance shareholder value" over all else in today's publicly traded businesses.

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[MultiScaleMale]

I think it will be fine. Depends on leadership.

 

[dhsierra1]

I think it will be fine. Depends on leadership.

Fender is carrying a boatload of debt, partly why they're launching the IPO. The key investors (read: institutional) will want to see that debt removed ASAP. And that means serious sales which could easily cut into quality. Remember when Fender was bought by CBS and all those crappy/cheap amps and such?

If the leadership can cool off Wall St off and get them to see past the quarterly reports, then yes, should be OK. My experience has shown otherwise, though......:scowl:

 

[smcd]

Harley Davidson's quality went way up when that company went public. I expect the same from Fender.

 

[CrewsControl]

<gandalf> This does not bode well! </gandalf>

 

[trunkshope6]

haha another reason to dislike rap and hip hop

 

[Phadreus]

Harley Davidson's quality went way up when that company went public. I expect the same from Fender.

When HD rebuilt from the AMF fiasco, their commitment to quality was fundamental in their success and still is today. I think one of the difficulties for many people is thinking of quality as something separate from what has to be done to run a business…when in effect the two are intrinsically related to one another. Too many people in industries today think you can have quality or profits but not both. There are many great examples, HD being one of them, that dismiss this misnomer. Only time will tell for Fender.

 

[OnederTone]

this does not bode well for the quality of their products IMHO, what w/the mantra of "enhance shareholder value" over all else in today's publicly traded businesses.

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[dhsierra1]

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Time will tell. The effect of IPOs on companies is a mixed bag, depending on why they're looking for capital in the first place and how good the management is.

I hope the IPO allows them to keep doing what they're doing and do it well. I'm just speaking from experience, YMMV, etc.

Edit: let's not forget what happened to Gibson when they were bought by Norlin, a publically traded company

 

[smcd]

When HD rebuilt from the AMF fiasco, their commitment to quality was fundamental in their success and still is today. I think one of the difficulties for many people is thinking of quality as something separate from what has to be done to run a business&#8230;when in effect the two are intrinsically related to one another. Too many people in industries today think you can have quality or profits but not both. There are many great examples, HD being one of them, that dismiss this misnomer. Only time will tell for Fender.

Fender and HD share a very similar business situation. They're non-essential "luxury" products. They're US made products that have a very strong brand recognition. Both companies were bought by enthusiasts who successfully rescued the company from large corporate owners that gave them a bad reputation. Both companies face strong competition from inexpensive overseas brands, but thrive regardless. I expect many of those who buy stock in Fender to be fans of the brand. I don't think any major investors will look at Fender the same way as they look at companies that no one has an emotional attachment to, such as IBM, Bank of America or Intel.

 

[dhsierra1]

<gandalf> This does not bode well! </gandalf>

LOL

 

[dhsierra1]

Fender and HD share a very similar business situation. They're non-essential "luxury" products. They're US made products that have a very strong brand recognition. Both companies were bought by enthusiasts who successfully rescued the company from large corporate owners that gave them a bad reputation. Both companies face strong competition from inexpensive overseas brands, but thrive regardless. I expect many of those who buy stock in Fender to be fans of the brand. I don't think any major investors will look at Fender the same way as they look at companies that no one has an emotional attachment to, such as IBM, Bank of America or Intel.

this makes sense.

 

[SolarMan]

I expect those who buy stock in Fender to be greedy MF'ers who will take advantage of the high quality reputation as of late and vote to go for quantity vs. quality.

If you want a quality Fender product, my advice is to buy it now!

 

[peledog]

haha another reason to dislike rap and hip hop

Ha ha....ha..... oi.







Let's hope this works well for Fender. Quality control, quality control, quality control.

 

[SolarMan]

Ha ha....ha..... oi.

trunkshope6 wasn't making a joke - this is what THEY said!

"But it warned that increasing popularity of other types of music, such as rap or house, could hurt demand for its guitars.

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[GregC]

Time will tell. The effect of IPOs on companies is a mixed bag, depending on why they're looking for capital in the first place and how good the management is.

I hope the IPO allows them to keep doing what they're doing and do it well. I'm just speaking from experience, YMMV, etc.

Edit: let's not forget what happened to Gibson when they were bought by Norlin, a publically traded company

I agree with the bolded part, which is why we really can't say whether it will bode well or not. Importantly, we don't know what percentage of the company will be publicly owned, at least from that story.

 

[SolarMan]

Weston Presidio owns a big chunk right now - I bet that they are the ones behind this

First bring Fender quality to new highs (cutting into profit)

Then bring the Squier line into the big-time spotlight with high quality and sell them at near zero profit

(This is probably how they got $250 million into debt)

Then fold the squier website and combine it into the Fender website - as now Squier is just as high quality as Fender in the opinion of many of us

Then go public and cash in with a board of directors and shareholders that demand high profits - all ready to go because the great reputation will take at least a few years to totally destroy

And after the company is wrecked, Weston Presidio (who should be thanked for the high quality of recent years) will have themselves a nice payday and probably own none of the stock as the company struggles to regroup...again.

 

[lethargytartare]

Fender and HD share a very similar business situation....

I would actually say there's very little, if any, similarity between the business positions of the two companies. HD's net income in 2011 was ~$600mil, Fender's was $19mil. Fender's product range is far wider than HD's, and Fender has lots of non-US products/brands. Fender is nearly half owned by a private equity firm. HD sold 235K bikes worldwide last year -- I suspect Fender sold dramatically higher numbers of its various products. When HD said they were going to focus on their core strengths, you could likely guess what that means -- but Fender just wants to expand (and with this IPO, pay off debt) -- there's nothing to suggest that they see a need to focus (or re-focus) on their core product quality.

Personally I wouldn't count on any IPO launched in the current economic climate to produce a large number of investors who value the company over sheer ROI...But the good news is that they're already largely owned by an equity group, so it doesn't seem likely that this IPO will make a big change in their strategies. But who knows at this point...

 

[ksandvik]

As with many other companies, the CEO sets the direction, IPO or no IPO. Bad CEO -> bad for the company and customers. Good CEO -> good for the company and customers. Now, having 250M or so in debt for a small company like Fender does not sound like a good CEO.

 

[dhsierra1]

it should be noted that Weston Presidio also owns a good sized stake in Guitar Center and that Fender earns about 15 or so % of their annual income/sales through GC.

Thanks for the interesting comments, folks