Gibson's Big "Ouch!"

Discussion in 'V.C.'s Parlor' started by duceditor, Feb 11, 2018.

  1. duceditor

    duceditor Dr. Squier

    Age:
    71
    May 29, 2014
    The Monadnocks, NH USA
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  2. Pat V.

    Pat V. Squier-holic

    Nov 21, 2014
    North America
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  3. Photobug57

    Photobug57 Squier-Meister

    Age:
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    297
    Jan 11, 2018
    Hebron, KY
    Unfortunately, in this day of sell offs and acquisitions, I saw this coming years ago. The same scenario plays out in corporate board rooms across America almost weekly. Look at Sears and K-Mart. It basically is "death by 1000 paper cuts."
     
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  4. duceditor

    duceditor Dr. Squier

    Age:
    71
    May 29, 2014
    The Monadnocks, NH USA
    What is to me equally sad and interesting is that according to this and other things I've read Gibson's "core business" is strong and bringing in good revenue. That, I assume, is referring to guitar making and sales. But like so many businesses Gibson seems to now sell "merchandise." In their case electronics -- Gibson now, I understand, owns several once big name "stereo gear" companies such as Onkyo, TEAC, Stanton and Cerwin-Vega.

    This year the company did not participate in NAMM, but did share in the big home electronics show.

    Maybe the guitar company will be spun off and survive. I for one hope so. I've loved Gibsons for a long, long time and my latest guitar -- a "left over" Les Paul CM -- is an absolute music-making winner.

    :( :( :( :(

    -don
     
  5. Photobug57

    Photobug57 Squier-Meister

    Age:
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    297
    Jan 11, 2018
    Hebron, KY
    I agree with you -don. It looks as if the guitar making/building is healthy. I'm certainly rooting for them on that front.

    Diversification can be a good thing if one watches which basket they put their eggs in. But in this case I think they have let their financial advisor(s) put them willy-nilly wherever they wanted to.

    You would expect Some of the electronics to do well but with the advent of home computer based recording!
     
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  6. bgmacaw

    bgmacaw Squier-Meister

    Age:
    58
    420
    Jan 19, 2018
    GA USA
    It's the story of our times that plays out often in both personal and business life.

    Borrow money for a good reason (education, expand/start a business).
    Borrow more money for questionable reasons (fancy vacations or hobby gear, vanity side businesses, etc).
    Borrow even more money to pay off existing debts (transfer credit card balances, venture capital investment).
    Shuffle debt around in a financial juggling act, paying increasing fees and charges.
    House of cards falls apart, end up in bankruptcy court.
     
  7. duceditor

    duceditor Dr. Squier

    Age:
    71
    May 29, 2014
    The Monadnocks, NH USA
    And underneath it all is often a lack of appreciation for a key reason for a company's initial success: it's people.

    My dad was a great sales rep. Trusted, and deservedly so, by buyers. Out there with all his heart. And making big bucks on commission.

    In comes new owners - just out of Harvard Business School - who ask one-another "why pay this guy all that money when we can hire some young college kid and give him one third that amount as a salary?"

    They asked my dad to show the young guy "the ropes." My dad said no and retired.

    One year later the company folded. The folks did not know that what buyers were really buying was guys like my dad doing things - making suggestions on what to carry and how to sell it -- not the product itself which was little different from its competitors.

    My own "employer" (Yes, Harvard administrators) tried several times to do that to me over the years, but my "I'll walk" (thanks dad!) combined with a hew and cry of those I actually served, made them think again and wiser/clearer thinking prevailed.

    Id E Ots

    -don
     
    Last edited: Feb 11, 2018
  8. mikesr1963

    mikesr1963 Squier-Nut

    Age:
    55
    870
    May 6, 2016
    Virginia
    To much money spent on the type of labor that produces only air. Then again, look at the size of Musician's Friend/Guitar Center's debt. If they were to fold they probably owe Gibson enough money to cause them to fold.
     
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  9. Eddie

    Eddie Dr. Squier

    Age:
    48
    Nov 5, 2016
    New York
    When they price their instruments at the same price as a pre-owned car, it's no wonder why their revenue stream is hurting. $1500 and I may buy that alpine white Gibson Les Paul Custom. Maybe I'd buy two. But at it's current price, they're getting nada from me.
     
  10. duceditor

    duceditor Dr. Squier

    Age:
    71
    May 29, 2014
    The Monadnocks, NH USA
    I think a lot of players feel similarly. And not just those who could not swing the price.

    Value is important. Especially on a purchase that is one of the heart, not of necessity.

    I'm that way. Especially at restaurants. If I feel something is not fairly priced I get no pleasure from having it even if it is itself wonderful.

    I truly enjoy my recent Gibson purchase. Is it worth several times the cost of an Epi? No. But it was "good value" anyhow. Worth the investment and then some.

    But when I wanted to replace the PUP with a P94 type and Gibson's own was 7 times the cost of a clone I bought the clone. And would do the same gain. Value is why.

    Now when we had no choice --as it was in the sixties -- there were expensive Gibsons (and Fenders) or junk, we saved and saved for the Gibson. But now? Why? To feel suckered?

    Kind of sad, but so. And Gibson better come to know it.

    -don
     
  11. Nickadermis

    Nickadermis Squier-Meister

    Age:
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    154
    Jan 2, 2018
    KcMo
    I am reminded of one of my grandfathers sayings. "Dance with who brung Ya" . I have seen far to many companies decide that they need to expand into x when they have been dealing with y for generations. Then proceed to alienate y for a sinking x.
     
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  12. Eddie

    Eddie Dr. Squier

    Age:
    48
    Nov 5, 2016
    New York
    Don, well said. There are too many other options available to us ... whether guitar or parts. I would pay for the Gibson name ... but only up to an extent.

    Value is the key. I need to feel that I received value for my money. I'm not paying $4700 for an LPC. I "may" pay $1700 for an LPC.

    So this is self inflicted. Guitars are not like cars ... it's not a prestige issue where the uber rich can afford to pay $100K for a car in sufficient numbers to allow the car maker to be profitable. Heck, most musicians are far from well off financially. Asking a struggling musician to buy a Lamborghini is not gonna happen.

    If Gibson folds, I would not bat an eyelash. I think it would be a great thesis paper for an Operations Management MBA as to why this once great company failed ...
     
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  13. theflow

    theflow Squier-holic

    Age:
    58
    Feb 16, 2017
    Palmetto,FL
    Henry's Forty million dollar robot tuner fiasco is what I've heard from employees is what started it,plus he is supposedly a micro managing **** but,I don't think they will be gone, someone will continue with the brand imho.
     
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  14. corn

    corn Squier-holic

    Feb 27, 2013
    San Diego
    As the life long saying goes,, “Too big for your britches “
     
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  15. fattboyzz

    fattboyzz Squier-Meister

    Age:
    53
    355
    Nov 29, 2017
    Sharpsburg ,Ga.
    Like sands through the hour Glass o_O
     
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  16. dbrian66

    dbrian66 Squier-holic

    Age:
    48
    Jul 14, 2017
    Maryland, USA

    I agree.

    The current configuration of the Gibson company may fail, but their name and their guitars are too iconic to die off. In the end, it may be better for the company to crash and burn. It will have to reorganize and rebuild and might come back stronger than ever. Kind of like Harley Davidson did in the 80's or 90's.
     
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  17. theflow

    theflow Squier-holic

    Age:
    58
    Feb 16, 2017
    Palmetto,FL
    That is a good/ close example,they almost went under but were bought by employees at the last minute.(May/June 1981)
     
  18. bgmacaw

    bgmacaw Squier-Meister

    Age:
    58
    420
    Jan 19, 2018
    GA USA
    Yep. That happens a lot in the software development business. At my previous job, I spent a year training my replacements in India. I should have walked but I guess I'm loyal and an easy touch.
     
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  19. surf green

    surf green Squier-holic

    Jul 15, 2014
    RI
    Let's see, annual income $1 billion, debt $520 million, with "coupon" payments of $16 million. Banks hesitating on a refi because Gibson's cost of doing business is too high. I don't think a Go Fund Me is going to drag down that debt. It's going to take much deeper pockets to solve that problem........who's got that kind of dough, the Russians, the Chinese, the Clinton Foundation? Not sure if the guitar strumming consumer would go for that.
     
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  20. Eddie

    Eddie Dr. Squier

    Age:
    48
    Nov 5, 2016
    New York
    Then again, I'm headed to Disney next week. 6 days for 5 people at the theme parks is $1985. Hotel, food, gas, etc ... will probably cost another $2000-3000.

    $5000 for a week at Disney. ARGH !!!!!!