Members Freeman Keller Posted August 30, 2017 Members Share Posted August 30, 2017 https://www.moodys.com/research/Moodys-downgrades-Gibsons-CFR-to-Caa3-outlook-negative--PR_371298 or for that matter, Guitar Center https://www.reuters.com/article/us-guitarcenter-debtrestructuring-idUSKBN19X2HV Maybe someone here who is close to the industry can comment. Link to comment Share on other sites More sharing options...
Members badpenguin Posted August 30, 2017 Members Share Posted August 30, 2017 While the article on Gibson was written in Latin for me, (I don't speak that language) it does show a negative trend, which you can see with the introduction of that "zero" cheapie line, trying to grab capital quickly.The GC one, is the exact same thing that has been going on for nearly a decade with them. Link to comment Share on other sites More sharing options...
Members Emory Posted August 30, 2017 Members Share Posted August 30, 2017 Would be sad days indeed to see either or both of these companies go under. Wonder if part of the decline in those learning and buying guitars has to do with computer programs that any idiot can use to make "music". Who needs to study, practice, learn when you can just hit some keys and boom! you've got something with a beat and some notes. Link to comment Share on other sites More sharing options...
Phil O'Keefe Posted August 30, 2017 Share Posted August 30, 2017 You can't buy Gibson stock. Gibson is a privately held company. Link to comment Share on other sites More sharing options...
Moderators daddymack Posted August 30, 2017 Moderators Share Posted August 30, 2017 as is Guitar Center...just ask Mitt Romney... Link to comment Share on other sites More sharing options...
Members BG76 Posted August 30, 2017 Members Share Posted August 30, 2017 as is Guitar Center...just ask Mitt Romney... Mitt Romney left Bain Capital in 1999/2000 and while it's true his severance agreement wasn't finalized until 2002 I'm not sure what he has to do with the discussion aside from a lame attempt to inject politics into the thread. Please clarify, what should we ask Gov. Romney about Guitar Center? Maybe you know something we don't. Guitar Center was purchased by Bain in 2007, which was about five years after Gov. Romney left the company. Link to comment Share on other sites More sharing options...
Members sammyreynolds01 Posted August 30, 2017 Members Share Posted August 30, 2017 Guitar Center won't go out of business because Bain won't let it go out of business. They can pay the debt. Gibson on the other hand it's not in a good financial position but neither is Fender. Link to comment Share on other sites More sharing options...
Members Bucksstudent Posted August 30, 2017 Members Share Posted August 30, 2017 I don't think that's what the thread is about... Link to comment Share on other sites More sharing options...
Members Bucksstudent Posted August 30, 2017 Members Share Posted August 30, 2017 Would be sad days indeed to see either or both of these companies go under. Wonder if part of the decline in those learning and buying guitars has to do with computer programs that any idiot can use to make "music". Who needs to study' date=' practice, learn when you can just hit some keys and boom! you've got something with a beat and some notes.[/quote'] Even with computer programs, you still need a background in theory to make good music. I knew a guy when I was in high school who studied theory intensively and produced incredible music via Garage Band in our broadcasting class. He was a fairly typical shaggy haired kid who I always assumed wasn't worth a second glance. Then I heard his music. The guitar is no longer at the forefront of popular music. It makes sense that sales are down if you consider the youth market is more interested in video games and social media than sitting around listening to LPs. I'm 25, and I didn't start playing because it was cool. I was inspired through older music via R.E.M., Velvet Underground, Patti Smith, the Sex Pistols, and Ramones. The only other guitar players starting out around me were either into Green Day or Metal, and not many of them put in the hours to play either well. I was in the seventh grade when I had an argument over why Rickenbacker was better than Fender with two other boys, because they'd never heard of Rickenbacker. The kid who loved Nirvana and Led Zeppelin played a Strat and eventually switched to drums. When I went to college, the only guitarists I met were exclusively acoustic strummers. I won't be sad if Gibson goes under. I have a college diploma hanging on my wall, but not a single Gibson in my house. Can't afford one. Link to comment Share on other sites More sharing options...
Members pekelnik Posted August 30, 2017 Members Share Posted August 30, 2017 Will my Gibson guitars still work if the company goes bankrupt? Link to comment Share on other sites More sharing options...
Members Les Paul Lover Posted August 30, 2017 Members Share Posted August 30, 2017 No, it will implode. It's really bad news I'm afraid. Link to comment Share on other sites More sharing options...
Members Les Paul Lover Posted August 30, 2017 Members Share Posted August 30, 2017 While the article on Gibson was written in Latin for me, (I don't speak that language) it does show a negative trend, which you can see with the introduction of that "zero" cheapie line, trying to grab capital quickly. The GC one, is the exact same thing that has been going on for nearly a decade with them. Essentially, Gibson has $375M of debt they need to refinance by mid 2018 or earlier. They be seemingly made a number if acquisitions that haven't turned out too well, and the profit before taxes and interest is pretty low compared to the level of debt they have (around 10% - and then they still need to pay interest and taxes........ so their ability to cover / pay back the capital making up the debt is pretty poor). Their profitability and sales are in decline too. It certainly doesn't make good reading. But companies do/can improve, and companies can go bust with a better outlook too...... Link to comment Share on other sites More sharing options...
Members pekelnik Posted August 30, 2017 Members Share Posted August 30, 2017 I better sell them quick! Link to comment Share on other sites More sharing options...
Members Etienne Rambert Posted August 31, 2017 Members Share Posted August 31, 2017 Bad time to buy Gibson stock but maybe a good time to buy Gibson guitars. The prices are so low on some of the USA series - you almost have to take the plunge. Will those prices go even lower? I'm hoping the prices for Memphis-series ES-LP's take a dive. I want one. Link to comment Share on other sites More sharing options...
Members Grant Harding Posted August 31, 2017 Members Share Posted August 31, 2017 Imagine how much a LP will cost in 30 years if they did get dragged under. The most depressing thing would be the brand getting sold to a mega-corp who then use it as a predatory weapon to extort money from companies that make clones. Hopefully they can turn it around (and I suspect they can, but they have some hard decisions to make. The fact that they're a private company is a huge plus in this situation. They'll be able to resize and adjust in ways that a publicly listed company wouldn't be able to. I'd love to help them out. Link to comment Share on other sites More sharing options...
Members Etienne Rambert Posted August 31, 2017 Members Share Posted August 31, 2017 I've been wondering how Gibson makes any money. Retailers are selling PLEK'd Les Paul Faded/Tribute/Studio for $700-$1K. Bad for investors maybe but great for guitar buyers. I'll get another one if the price is right. Link to comment Share on other sites More sharing options...
Members Bucksstudent Posted August 31, 2017 Members Share Posted August 31, 2017 Imagine how much a LP will cost in 30 years if they did get dragged under. The most depressing thing would be the brand getting sold to a mega-corp who then use it as a predatory weapon to extort money from companies that make clones. Hopefully they can turn it around (and I suspect they can, but they have some hard decisions to make. The fact that they're a private company is a huge plus in this situation. They'll be able to resize and adjust in ways that a publicly listed company wouldn't be able to. I'd love to help them out. There was a time when Les Pauls were selling for less than $100. My grandfather claims he bought a Les Paul at a flea market for $50 in the mid 80's, and immediately sold it for $100. Before Slash, they weren't doing so well. Link to comment Share on other sites More sharing options...
Members Etienne Rambert Posted August 31, 2017 Members Share Posted August 31, 2017 Essentially, Gibson has $375 of debt they need to refinance by mid 2018 or earlier. They be seemingly made a number if acquisitions that haven't turned out too well, and the profit before taxes and interest is pretty low compared to the level of debt they have (around 10% - and then they still need to pay interest and taxes........ so their ability to cover / pay back the capital making up the debt is pretty poor). Their profitability and sales are in decline too... ---- $375 isn't much. Heck I can mail Henry a check to tide him over. He can mail me one of those Memphis ES LP's as collateral....one w/a vibrato. Link to comment Share on other sites More sharing options...
Members strayGoat Posted August 31, 2017 Members Share Posted August 31, 2017 https://www.moodys.com/research/Moodys-downgrades-Gibsons-CFR-to-Caa3-outlook-negative--PR_371298 or for that matter, Guitar Center https://www.reuters.com/article/us-guitarcenter-debtrestructuring-idUSKBN19X2HV Maybe someone here who is close to the industry can comment. Hey FK! I have to confess that the specifics of the Gibson article are completely over my head - I just cannot interpret the jargon. I can say that, looking at their product lineup (just electrics), I have to wonder immediately whether any company can really sustain that level of variety. There are something like 300 electric guitar models on their site, not including finish variations. I kind of feel the same way when I look at a restaurant menu that has hundreds of available items ranging from burgers to Indian food - a gut sense that they'd be much better off concentrating on a much more limited number of best sellers. In any case, I hope Gibson is able to hang in there, somehow. Despite reports that it's a miserable work environment (hope that has improved), they are an old and dear American institution and I'd really hate to see them go under. Link to comment Share on other sites More sharing options...
Members Grant Harding Posted August 31, 2017 Members Share Posted August 31, 2017 It's way bigger than just guitars I think. If I'm not mistaken they've bought other companies in past, so who knows what divisions are doing well vs not so much. I still rate their chances highly. Link to comment Share on other sites More sharing options...
Members badpenguin Posted August 31, 2017 Members Share Posted August 31, 2017 uhh wait, didn't that happen in the 70's already? Norlin anybody? Link to comment Share on other sites More sharing options...
Members sammyreynolds01 Posted August 31, 2017 Members Share Posted August 31, 2017 There was a time when Les Pauls were selling for less than $100. My grandfather claims he bought a Les Paul at a flea market for $50 in the mid 80's, and immediately sold it for $100. Before Slash, they weren't doing so well. Yeah in the 80's Gibson wasn't doing so well and neither was Fender. Link to comment Share on other sites More sharing options...
Members Grant Harding Posted August 31, 2017 Members Share Posted August 31, 2017 They both possibly underestimate the threat of overseas competition until it was too late. Also Fender was part of CBS at that time and they didn't give a crap about guitars. Link to comment Share on other sites More sharing options...
Members Etienne Rambert Posted August 31, 2017 Members Share Posted August 31, 2017 @Badpenguin: Try out one of those faded LP's. I love mine. Not only that my son is buying a Tribute. Not only that - my guitar repair guy says he wants a Faded. I took mine to him for a check-up and string change. He said it was already set up. He just tweaked intonation on D and G strings a little. The competition is Pac-Rim. And these inexpensive LP's just blow them away. I think Mexican Fenders will do OK. I still want a CP JM. But Pac-Rim guitars are in for it. - at least until Gibson goes belly-up. Link to comment Share on other sites More sharing options...
Members Freeman Keller Posted August 31, 2017 Author Members Share Posted August 31, 2017 Hey FK! I have to confess that the specifics of the Gibson article are completely over my head - I just cannot interpret the jargon. I can say that, looking at their product lineup (just electrics), I have to wonder immediately whether any company can really sustain that level of variety. There are something like 300 electric guitar models on their site, not including finish variations. I kind of feel the same way when I look at a restaurant menu that has hundreds of available items ranging from burgers to Indian food - a gut sense that they'd be much better off concentrating on a much more limited number of best sellers. In any case, I hope Gibson is able to hang in there, somehow. Despite reports that it's a miserable work environment (hope that has improved), they are an old and dear American institution and I'd really hate to see them go under. I'm not an investment councilor but the little I know is that Moody's is a service that ranks the credit of government and commercial entities. I have mostly seen them ranking municipal bonds - like when a city wants to borrow money for a new sports stadium or road project - basically how solid is that entity as an investment risk. They don't rank stocks (and my title is tongue in cheek, I knew that Gibbie was privately held). Basically what Moodys is saying, I believe, is that they think Gibson is a poor credit risk and has become worse. Sometimes that is a Catch 22 - they have high debt load but can't borrow money - often it leads to restructuring, selling off assets, sometimes bankrupcy. I'm also not in any position to comment on Gibsons recent management decisions, there is plenty of discussion in other areas. Like many here I have sometimes shaken my head and asked, "what the heck are they thinking" but since I have no idea of Gibsons big picture its pretty hard to say the decisions are right or wrong. As we know, Gibson does own this forum and I must give them kudos for not interfering with editorial comments or pressure on the moderators - I know other forums that would kill this particular topic as soon as I started it. Link to comment Share on other sites More sharing options...
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