I was watching Jim Cramer's Mad Money this afternoon and he was talking about four upcoming IPOs and giving his thoughts on them. The first three got good reviews, but the fourth was Fender and he gave the Fender IPO a big thumbs down. The main thing he said was that you can't pay 20x expected earnings for any IPO and that Fender's earnings were dismal at best. Here's another view:

http://www.thestreet.com/story/11616704/1/music-ipos-lose-beat.html

There were several things in this story that got my attention, but the biggest was that Moody's has downgraded Guitar Center's credit rating:

"Fender's biggest problem is its biggest customer, retailer Guitar Center. That single client accounts for 15% of its sales. Moody's recently downgraded Guitar Center and said the company could default on its debt. That scenario would be bad news for Fender, which is currently owed $11 million by Guitar Center."

There are also references to the use of exotic woods and the fact that Fender gets its amp tubes primarily from countries like Russia, China and the Czech Republic.

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Dennis in CR
Rockin' since 1963

It's prolly more than 15% of all sales within USA borders but FMIC has always made its larger fortune selling abroad.

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Just think of how awesome a guitar player you could have been by now if you had only spent the last 10 years practicing instead of obsessing over pickups and roasted maple necks.

I think you'll find that GC's debt load is more reflective of operating costs rather than product depreciation.
Sales is difficult and constantly in flux, your sales force must be not only knowledgeable about the product line but most importantly able to assess a potential customer and how to close a sale.
Most of the GC sales force are too young and inexperienced to be great salespeople.
This will reflect heavily in your loss and profit figures.
GC is a Big Box Chain, that amount of volume sacrifices what is an intrinsic factor for volume sales. That factor is a musical instrument which is a personal event intricately connected to the unique perspective of each customer. In other words its very much a time consuming hands on interaction, difficult to pull off if the Boss is calling for moving product out the door....

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"C'est parti mon Kiki "

People just aren't spending as much on music anymore. Whether it's recorded music, lessons, or instruments. The unfortunate truth is that most people view music as a passing hobby, and they don't invest much time (or money) in it. Over the past two or three years the music store that I work at has seen a large decrease in business. We have half the students we had three years ago, our Fenders have stuck to the walls since then because no one wants to drop more than $200 on a guitar, and in general things aren't looking good. We're just playing things very safe in hopes we'll outlast the bad economy. So far it's working all right, but as hard as it's hitting us I can't imagine how it's hitting all the big chain stores like Guitar Center and the manufacturers.

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Sam Ash has been in business for 80+ years, is their sales staff any better than Guitar Center?

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It depends. My local Sam Ash has a mix of knowledgeable sales people and people who shouldn't be working there. No one has ever been rude to me at Sam Ash. Guitar Center either. I usually try to deal with Mom & Pop shops whenever possible, but they are really starting to dry up. I try to deal with Cintioli's in Philadelphia whenever possible.

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Life...... It's sexually transmitted and always fatal

If Gc does go out, i don't think fender will take that huge of a hit. they will just be replaced by some other mass chain. also I am not sure why he is mentioning fenders vacuum tube sources, aren't those the only current manufacturing sources?

but in all honestly I do not see fender stock value increasing much over base very quickly. its not a stock you buy to flip in a month. but I also do not see fender going bankrupt anytime soon, so i plan on investing fender has been around for a long time and will remain around for a long time. granted there have been some changes over the years but its a name that will stand the test of time. who knows, by the time my children get my shares they may be worth a bit more

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Yes. Somebody's crackin' the whip over at Sam Ash where I'm at. Mostly jerks and shysters over at GC (young and old), but a bunch of polite young kids and older (30's, 40's) adults over at Sam Ash...ear rings, tats, you name it -- but highly professional conduct over at Sam Ash. Tough negotiators too, but once you got them locked in on a win/win deal, they take it!

I think the problem at GC is ...the fascism of corporatism -- the employees hate the price gouging, crappy equipment these days, low wages, crappy benefits, and short schedules to keep them part-time to avoid raises and full-time benefits. Based on what I'm hearing, they (the employees) want to see GC fail. GC is "hated" around here.

I don't hate GC, FYI. I pity them. They've wrecked the industry they sought to dominate and now...they dominate a very badly tarnished brand name and a wrecked industry. I'll be around to help clean up the pieces after they implode!

Based on what I'm seeing...used guitars are going to become very valuable and those who can build and repair guitars are gonna be making bank! The only way the GC model will survive is if they treat their employees like human beings and ensure customers are happy. But, I don't think GC can afford to do that now -- they're over extended and they'd have to cut quality even further to treat their employees like human beings. If quality is cut any further...a smile and professionalism won't cut it.

If Fender cuts quality any further...nope.

If GC goes under and a new big box music shop pops-up with the same ole routine packaged a little differently, nope.

It's time for the "investors" to lose a few notches on their pant holder uppers -- dah fat's goin' bye-bye!

I think the IPO is a bad idea. It just creates more fascism...! I'd rather see Fender go bankrupt and rebuild from scratch than to add more corporate fascism to the equation, what's created the problems to begin with.

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"The individual is handicapped by coming face to face with a Conspiracy so monstrous he cannot believe it exists. The American mind simply has not come to a realization of the evil which has been introduced into our midst." J. Edgar Hoover

"fascism" gets used way to much here


RCB-CA-USA

23 matches for fascism

55 matches total in forrum

31 matches for fascist

79 matches total in forrum.

the forum matches are mostly contained in replies

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"JOBS act and defining itself as an "emerging growth company." That means no Sarbanes-Oxley auditor attestation, reduced disclosure of executive pay and no say-on-pay votes. "

May sound like gobblty goop but it is a red flag to me. Sarbanes-Oxley was designed to protect shareholders, if they are wriggling out of Sarbanes-Oxley rules then there is less shareholder protection, and as a potential shareholder I might just take a pass.

Keep your eyes open for good deals and discounts at GC. Unfortunately the economy isn't showing signs of really taking off yet, so consumer discretionary spending, like musical instruments isn't likely to take off just yet either. But it is really good to see a US based company looking for growth in foreign markets, like many other US companies.

It's a fashionable sound bite, can't understand why but I suspect an absence of the actual definition of fascism....

Fascism
a. A system of government marked by centralization of authority under a dictator, stringent socioeconomic controls, suppression of the opposition through terror and censorship, and typically a policy of belligerent nationalism and racism.
b. A political philosophy or movement based on or advocating such a system of government.

It hardly coincides with a corporate ethos which itself is pure capitalism in it's most stringent application.

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"C'est parti mon Kiki "

I was saying GC's name brand is badly tarnished. However, Fender has tarnished their name too. I won't buy another Mustang amp anytime soon, for sure. The Mustang line chased me over to Blackstar and I'm way happy with my Blackstar amp, no reason to buy another Fender amp anytime soon. The good teles and strats are *way* out of my price range new, so I'll be buying used, for sure. I'm hearing way too many USA quality control complaints overall. And, as Violin Parent put it, it's nearly *impossible* to obtain approval and purchase enough product to open an Authorized Fender Dealership. I had a real bad experience with *many* Squier guitars, so bad it was obvious profit won out over music, 100%. I thoroughly love my Hwy 1 but know that Fender could have made a much better guitar for a few bucks more... ...tarnished. They lost an amp customer, a new guitar customer, and exposure and referrals here.

Since corporatism is fascism and fascism sucks (corruption, greed, oppression)...I don't see things getting better for Fender. An IPO is like going from the frying pan into the fire in my book.

The banks can only rob Peter to pay Paul so many times before Peter's got nothing left nor the desire to pay Paul anymore. ...I think we've reached that point. Peter is goin' broke to pay Paul and Peter is verrrry disappointed with the quality yet the bank wants to loan more money to rob Peter to pay Paul again? An IPO means more dept, more expectations, more panic products craftily packaged...it won't fly.

somebizarredude...thank you for keeping my stats up-to-date. ...how many times I have said Squier and Hwy 1 in the past 6-months?

oh...speaking of GC. Did anybody notice the $20.00 coupon last week for purchases over $99.00??? Suddenly, some of the good stuff around $100.00 disappeared when the coupon went up, and then reappeared when the coupon expired... Which reminds me of another ad they did for $100.00 off for purchases over $499.00 and over...some of the good stuff that was around $499.00 saw temporary, slight price drops nullifying the coupon...again, the good stuff not available, the coupon used to bait us in thinking..."YEAH, I'm getting a Blackstar for a $100.00 off..." ..."what? you dropped the price a few bucks on the Blackstar when the coupon went up? why??? ...oh...can't use the coupon for the discount." ...after the coupon expired, the prices went back up -- fascism.

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"The individual is handicapped by coming face to face with a Conspiracy so monstrous he cannot believe it exists. The American mind simply has not come to a realization of the evil which has been introduced into our midst." J. Edgar Hoover

no problem but i have to decline your request. I don't intend to put much more work into researching your stats, that one just happened to be an easy one. when its used correctly it doesn't really apply to anything else here, so its generally not an abused word
but hey, everyone has a favorite word they like to throw out to try and make their
opinions sound knowledgeable

i am just busting ya balls though man

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There's a vicious circle that all manufacturers have gotten caught up in. Production over rides quality. the markets are flooded with goods, no matter what, VERY few things are like they used to be.

From my own observation, the only Fender line that is staying true to what we expect is the American Standards. I don't have access to Custom Shop instruments to make a personal judgement, but close friends have them and love them.

Guitar Center had the opportunity to be great. I think employee attitude has a lot to do with all the little posers who go in and try to show off.

Think about it, how many times could you listen to "Smoke On The Water" played poorly before your brain seized ?

From the mouth of a full-blown nazi fascist:

"Fascism should more properly be called corporatism because it is the merger of state and corporate power." -- Benito Mussolini

Further:

"Fascism advocates a state-controlled and regulated mixed economy; the principal economic goal of fascism is to achieve national autarky to secure national independence, through protectionist and interventionist economic policies.[19] It promotes the use and primacy of regulated private enterprise and private property contingent upon service to the nation, but where private enterprise and private property are failing, inefficient, or unable to fulfill fascist goals, it supports the use of state enterprise and state property in those circumstances.[19] At the same time, fascists are hostile to financial capital, plutocracy, and "the power of money".[19] It supports criminalization of strikes by employees and lockouts by employers because it deems these acts as prejudicial to the national community;[20]"

http://en.wikipedia.org/wiki/Fascism

Fascism is state controlled corporatism -- not free market capitalism. Goin' IPO means Fender is turning fascist, wittingly or unwittingly.

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"The individual is handicapped by coming face to face with a Conspiracy so monstrous he cannot believe it exists. The American mind simply has not come to a realization of the evil which has been introduced into our midst." J. Edgar Hoover