Gibson In Trouble?

[je00143]

This may make for "interesting reading".

http://www.tennessean.com/story/money/industries/music/2016/03/04/gibson-brands-hit-credit-downgrade/81336440/

 

Since I am a finance and investment guy, this got my attention, real quick.

 

Gil

[Conneazoo]

It seems that their main focus is moving from musical instruments to consumer electronics.

 

IMHO, this has shown its ugly face in their quality control department for quite some time now.

 

Thanks for sharing the link.

[tulk1]

Revenues were approximately $1.7 billion for 2015.

WTH did they do with it all?

 

Another thing I don't get is what do they with ALL those guitars they didn't sell the year before. I mean, if they just give 'em away or toss 'm out I'd take one.

[tbonesullivan]

Revenues are not the same as profits. I'm pretty sure that Henry J and others have a ton of creditors they owe money to. They got their credit downgraded because of issues with repayment I would think.

[TalismanRich]

Right you are, Tbone.

 

In the recent past they have purchased Onkyo, KRK, Cerwin Vega, Teac, Phillips, Pioneer, Cakewalk and Stanton. Most of that was done via debt. Servicing that debt has consequences. As a result, the company is no longer Gibson Guitars but Gibson Brands

 

In 2010, Gibson brought in $300 million in total sales and showed an earnings-before-taxes-and-interest margin of 12.9 percent on its balance sheet, according to Moody's. The acquisitions have led to an explosion in annual revenue, up to $2.1 billion in 2014, but they also narrowed the company’s earnings margin to 4 percent last year. Tenneseean Aug 6 2015.

 

All its going to take is a downturn, and Gibson Brands could drown in its own debt.

 

I posted an article years ago about Henry J's goals. He stated that he wanted to be bigger than Yamaha. When you start looking at what Yamaha produces, its everything from musical instruments, electronic components, and communication equipment to motorcycles, ATVs and jetskis, golf carts and factory automation equipment. They do about $7 Billion a year in business.

[tbonesullivan]

Gibson will never be Yamaha, not with an idiot like Henry J at the helm. Yamaha has a history almost as long as Gibson's, and they built their brands pretty much from the ground up. They also have a completely different business and advertising model than Gibson. They literally have products that are so good that they sell themselves. Most people I talk to know that Yamaha Musical instruments = outstanding value and quality. They put in a TON of R&D into their instrument lines to improve them. They work with artists, engineers, etc, and are developing new products.

 

Henry J and Gibson tried to become Yamaha by sucking up other companies. It doesn't work that way. You end up with a ton of redundancy, and an unwieldy company. The same thing has happened somewhat with Fender, which is why they sold off a bunch of parts of the Kaman Music acquisition. They simply didn't know how to use what they bought, which seems to be a commonality with both Gibson and Fender.

[Panzer]

I have the solution for them , just start stringing 2x4's and stamp Less Paul on them - o wait

[davesultra]

If the poop gets too deep, they'll sell to some other conglomerate and the Gibson name will continue on. Big question then will be "What" will they become?

[gary0313]

WTH did they do with it all?

 

Another thing I don't get is what do they with ALL those guitars they didn't sell the year before. I mean, if they just give 'em away or toss 'm out I'd take one.

Actually, you might not want one. In January I bought a 2016 SG Traditional with P-90's. I regretted not buying a '61 Les Paul SG in 1970 for $175. Guess I was having not-buyers remorse. Anyway the thing arrives, I plug it in and everywhere I touch the body of the guitar I get horrible static thru the amp so I send it back. Replacement comes, same thing! So look inside the control cavity, THERE'S A FREAKIN' CIRCUIT BOARD IN THERE- WTF!!! About that time I came to my senses, sent it back, and bought a beautiful Almond Sunburst H535PM with Seth Lovers from Wolfe Guitars. Thank you, thank you, thank you to Graeham and Jay. Cost twice as much but infinitely better guitar.

[PunkKitty]

Actually, you might not want one. In January I bought a 2016 SG Traditional with P-90's. I regretted not buying a '61 Les Paul SG in 1970 for $175. Guess I was having not-buyers remorse. Anyway the thing arrives, I plug it in and everywhere I touch the body of the guitar I get horrible static thru the amp so I send it back. Replacement comes, same thing! So look inside the control cavity, THERE'S A FREAKIN' CIRCUIT BOARD IN THERE- WTF!!! About that time I came to my senses, sent it back, and bought a beautiful Almond Sunburst H535PM with Seth Lovers from Wolfe Guitars. Thank you, thank you, thank you to Graeham and Jay. Cost twice as much but infinitely better guitar.

It's cheaper to manufacture circuit boards with machines than to hand wire a guitar circuit. I've pulled and rewired a few Gibsons with PC boards. The tone dramatically improves after a decent wiring harness is installed.

[tulk1]

Actually, you might not want one. In January I bought a 2016 SG Traditional with P-90's. I regretted not buying a '61 Les Paul SG in 1970 for $175. Guess I was having not-buyers remorse. Anyway the thing arrives, I plug it in and everywhere I touch the body of the guitar I get horrible static thru the amp so I send it back. Replacement comes, same thing! So look inside the control cavity, THERE'S A FREAKIN' CIRCUIT BOARD IN THERE- WTF!!! About that time I came to my senses, sent it back, and bought a beautiful Almond Sunburst H535PM with Seth Lovers from Wolfe Guitars. Thank you, thank you, thank you to Graeham and Jay. Cost twice as much but infinitely better guitar.

I've seen those circuit boards. Have absolutely NO desire for one. But like PK has done, you can pull that and replace it with traditional electronics. And if they were giving them away .... that's the only way I'd own a current Gibs. Well, that's not true. But I'd certainly not put them tops on my list. Got a Heritage I'd like. And one them guitars made there in Maryland on my want list.

[Conneazoo]

I've seen those circuit boards. Have absolutely NO desire for one. But like PK has done, you can pull that and replace it with traditional electronics. And if they were giving them away .... that's the only way I'd own a current Gibs. Well, that's not true. But I'd certainly not put them tops on my list. Got a Heritage I'd like. And one them guitars made there in Maryland on my want list.

I likes me them there Maryland gee tars muhsef! I gots a few.

[AP515]

I likes me them there Maryland gee tars muhsef! I gots a few.

I gots a few too.

[gary0313]

I've seen those circuit boards. Have absolutely NO desire for one. But like PK has done, you can pull that and replace it with traditional electronics. And if they were giving them away .... that's the only way I'd own a current Gibs. Well, that's not true. But I'd certainly not put them tops on my list. Got a Heritage I'd like. And one them guitars made there in Maryland on my want list.

I guess what really bugs me is how can they feel they're being honest calling it a Traditional when nothing could be less traditional than a hidden printed circuit board that is prone to multiple problems ( have you seen those skinny little wires and cheap looking pots, switch and caps? ). And why when you've spent that much money for a guitar should you have to completely rewire it with new pickups? I don't get it. And then whoops, there goes your warranty! To each their own, but for me it's a no go.

[tulk1]

To each their own? What's that mean?

[schundog]

to each his own

One has a right to one's personal preferences, as in I'd never pick that color, but to each his own. Versions of this maxim appeared in the late 1500s but the modern wording was first recorded in 1713.

[DetroitBlues]

to each his own

One has a right to one's personal preferences, as in I'd never pick that color, but to each his own. Versions of this maxim appeared in the late 1500s but the modern wording was first recorded in 1713.

Thanks for the Wiki update....

[davesultra]

Thanks for the Wiki update....

And if it's on Wiki it's gotta' be true!

[tbonesullivan]

I had a Gibson SG standard with the circuit board. It was one of the best sounding guitars I owned. I wish I hadn't sold it sometimes. I just couldn't live with the color. It never had any problems, worked the way it should. I don't understand how a PCB is OK in an amp but sacrilege in a guitar. I'd buy another Gibson SG Standard with a PCB board if one comes along in great shape in the natural burst finish. No I wouldn't gut it. I also really question anyone seeing major gains in sound by replacing the PCB. With guitars you are dealing with a VERY HIGH Impedance circuit. Ever seen the wires that dimarzio uses for pickup leads these days? They are so thin you can barely strip them without cutting through the wires themselves. I haven't notice any lack of tone or power from my Tone Zone.

 

I mean think about it, the wire in pickup is somewhere around 40-45 gauge. REALLY THIN. even the traces on a PCB board are VASTLY larger than the pickup winds. And the whole tone capacitor thing has been debunked already through exhaustive testing.

[MikeChandler]

WTH did they do with it all?

 

Another thing I don't get is what do they with ALL those guitars they didn't sell the year before. I mean, if they just give 'em away or toss 'm out I'd take one.

 

They only built the initial orders, which didn't sell well, so GC, MF, m123, sweetwater, etc didn't re-order, and gibson didn't build any more of those. By june they were already taking orders for SR model guitars that didn't have the robo-tuners and wide necks. I think they were already shipping 2016 models in November of 2015, so they were taking orders for those in October? That's how badly the 2015 models sold.

 

So the answer is if there's any inventory still in warehouses, it's in the sales chain, not at gibson.

 

That's pretty standard in manufacturing.

[PunkKitty]

More news:

 

Gibson looks to shed Nashville properties

[Rod]

I see this as a way of capitalizing on a wave of prosperity in Nashville more so than gasping for air. A quick and painless way of injecting $6M cash into a company overburdened by debt by selling property they apparently don't occupy. Just good management for a change.

 

From an outsiders view, this is the time to sell downtown Nashville. Last year from my downtown hotel window I counted 7 construction cranes. There was hotel, condo, apartment, and retail construction at literally every turn. Downtown Nashville hotel rooms are ridiculously expensive. Tootsie's added a 3rd floor. It's been impossible (for me) to get into The Bluebird for at least a few years. All the Broadway bars are shoulder to shoulder from early evening on.

 

Between the TV show Nashville and the rise in popularity of country music, Nashville appears to be a experiencing an economic boom. I really like Nashville, or at least I did. It's gotten too crowded and too expensive for me. I'll more than likely opt for Austin this year.

 

Gibson is just gettin' while the gettin's good.

 

 

[AP515]

I see this as a way of capitalizing on a wave of prosperity in Nashville more so than gasping for air. A quick and painless way of injecting $6M cash into a company overburdened by debt by selling property they apparently don't occupy. Just good management for a change.

 

I agree that it may be a good time to sell in Nashville. It seems fortunate that they have a plot of land that is worth so much. Would they have as much debt if they hadn't missed the market's sentiment in 2015? The government drying up their rosewood supply for 2 years probably didn't help, but the lousy 2015 was probably a bigger hit for them financially.

[DetroitBlues]

They only built the initial orders, which didn't sell well, so GC, MF, m123, sweetwater, etc didn't re-order, and gibson didn't build any more of those. By june they were already taking orders for SR model guitars that didn't have the robo-tuners and wide necks. I think they were already shipping 2016 models in November of 2015, so they were taking orders for those in October? That's how badly the 2015 models sold.

 

So the answer is if there's any inventory still in warehouses, it's in the sales chain, not at gibson.

 

That's pretty standard in manufacturing.

I had my "shop worn" 2016 in October....

[Blunote]

 

They only built the initial orders, which didn't sell well, so GC, MF, m123, sweetwater, etc didn't re-order, and gibson didn't build any more of those. By june they were already taking orders for SR model guitars that didn't have the robo-tuners and wide necks. I think they were already shipping 2016 models in November of 2015, so they were taking orders for those in October? That's how badly the 2015 models sold.

 

So the answer is if there's any inventory still in warehouses, it's in the sales chain, not at gibson.

 

That's pretty standard in manufacturing.

 

I'm pretty sure the 29% price increase for 2015 had a big impact on sales volume.