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Post subject: I was wondering about that Fender IPO...
Posted: Fri Oct 04, 2013 6:23 am
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...then I read this:

http://www.pehub.com/2013/09/30/with-co ... -friendly/

"Fender.com provides a forum for users to ask questions or raise issues."

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Last edited by Miami Mike on Fri Oct 04, 2013 6:30 am, edited 1 time in total.

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Post subject: Re: I was wondering about that Fender IPO...
Posted: Fri Oct 04, 2013 6:25 am
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I think Bain Capitol is about to take a big loss on GC.

Just thinking out loud...

What say you?

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Post subject: Re: I was wondering about that Fender IPO...
Posted: Fri Oct 04, 2013 6:45 am
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I don't understand guys who make two separate posts moments apart to say what they could have said in the first original post. Of course, you have almost 18,000 posts, so...

As far as GC and Bain Capital, let the chips fall where they may.

And have you managed to get signed up for ObamaCare yet..? :mrgreen:

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Post subject: Re: I was wondering about that Fender IPO...
Posted: Fri Oct 04, 2013 7:02 am
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Informative article. Thanks for posting.

Nice to know that Fukunaga does not know the difference between a presumption and an exaggeration.


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Post subject: Re: I was wondering about that Fender IPO...
Posted: Fri Oct 04, 2013 11:00 am
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CRGuitarMan wrote:
I don't understand guys who make two separate posts moments apart to say what they could have said in the first original post. Of course, you have almost 18,000 posts, so...

As far as GC and Bain Capital, let the chips fall where they may.

And have you managed to get signed up for ObamaCare yet..? :mrgreen:


I'll re-register and start from zero if it bothers you - most of us don't care about post counts, I know that I don't. I wish they did away with 'em.

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Post subject: Re: I was wondering about that Fender IPO...
Posted: Fri Oct 04, 2013 11:55 am
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I don't think I'd try to take a lemonade stand public in this business/economic climate. The touchstone that profitable commerce relies upon is regulatory and fiscal predictability. Those precepts have been AWOL for the last five years.

Arjay

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Post subject: Re: I was wondering about that Fender IPO...
Posted: Fri Oct 04, 2013 4:52 pm
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Miami Mike wrote:
I think Bain Capitol is about to take a big loss on GC.

Just thinking out loud...

What say you?


How can they take a loss if nobody will buy their share of GC? GC's debt load is a huge nut nobody in their right mind would undertake based on corporate performance in the past 5 years. Fender has some big notes coming due also but nothing that compares to GC's burden. I feel sorry for people who work at GC as they might not be around very long if GC can't keep getting extensions and interest reductions on their debt. GC has not even been paying the interest on the interest. I don't know how they've stayed afloat. GC is Fender customer numero uno. If GC should go down....wow. Also the future fate of all the online fronts owned by GC (Musicians Friend, Music 123, WW&BW, etc) rests on the continued operation of GC. GC hasn't made dollar one since Bain bought them.

The direct Fender website sales coming soon is a great idea to mitigate at least some of the shock if they should lose GC as a customer. There are other places to buy Fender gear of course, but nobody sells or orders more of it than GC and their associated web fronts. Looks like Fender's direct online sales operation with customized options will be good for people who don't like off the rack stock models. It should be good for Fender in the long run. Fender has always had good customer service and support, even during the CBS era, but it has NEVER been better than today!

As for Fender's pulled IPO, the timing was wrong coming right after the Facebook IPO fiasco, and when they saw the numbers coming in on projected share pricing they were wise to pull it. Part of the reason the projected share pricing was so low for the Fender IPO was Fender's debt. It isn't as huge or unmanageable as GC's but it was dragging projected share pricing down.

The general consensus in the financial community from what I read since the IPO got pulled was that FMIC, even being as big as it seems to we Fender fanatics, is in fact a smallish business as major manufacturers go, and that FMIC was trying to wear big boy pants when they actually didn't fit yet. Also there was a major concern among stock analysts about the declining demand for guitars, which of course is Fender's base product offering. Their analysis was that the declining demand for guitars has been the result of the modern music trends toward electronic instruments and away from guitars. I know it sounds crazy to us, and a case could be made about the decline in guitar sales being more a result of the draggy economy...but truly that is how the number crunchers at the major brokerages were seeing the FMIC IPO. The debt and declining or stagnant sales were the two factors that caused the IPO share valuation to be unfavorable. A Fender IPO may still happen, but it will be a few more years.


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Post subject: Re: I was wondering about that Fender IPO...
Posted: Fri Oct 04, 2013 5:30 pm
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brotherdave wrote:
How can they take a loss if nobody will buy their share of GC? GC's debt load is a huge nut nobody in their right mind would undertake based on corporate performance in the past 5 years. Fender has some big notes coming due also but nothing that compares to GC's burden. I feel sorry for people who work at GC as they might not be around very long if GC can't keep getting extensions and interest reductions on their debt. GC has not even been paying the interest on the interest. I don't know how they've stayed afloat. GC is Fender customer numero uno. If GC should go down....wow. Also the future fate of all the online fronts owned by GC (Musicians Friend, Music 123, WW&BW, etc) rests on the continued operation of GC. GC hasn't made dollar one since Bain bought them.

The direct Fender website sales coming soon is a great idea to mitigate at least some of the shock if they should lose GC as a customer. There are other places to buy Fender gear of course, but nobody sells or orders more of it than GC and their associated web fronts. Looks like Fender's direct online sales operation with customized options will be good for people who don't like off the rack stock models. It should be good for Fender in the long run. Fender has always had good customer service and support, even during the CBS era, but it has NEVER been better than today!

As for Fender's pulled IPO, the timing was wrong coming right after the Facebook IPO fiasco, and when they saw the numbers coming in on projected share pricing they were wise to pull it. Part of the reason the projected share pricing was so low for the Fender IPO was Fender's debt. It isn't as huge or unmanageable as GC's but it was dragging projected share pricing down.

The general consensus in the financial community from what I read since the IPO got pulled was that FMIC, even being as big as it seems to we Fender fanatics, is in fact a smallish business as major manufacturers go, and that FMIC was trying to wear big boy pants when they actually didn't fit yet. Also there was a major concern among stock analysts about the declining demand for guitars, which of course is Fender's base product offering. Their analysis was that the declining demand for guitars has been the result of the modern music trends toward electronic instruments and away from guitars. I know it sounds crazy to us, and a case could be made about the decline in guitar sales being more a result of the draggy economy...but truly that is how the number crunchers at the major brokerages were seeing the FMIC IPO. The debt and declining or stagnant sales were the two factors that caused the IPO share valuation to be unfavorable. A Fender IPO may still happen, but it will be a few more years.


+1000 on EVERY SINGLE POINT!

It seems that someone (besides myself) reads the WSJ and Business Daily once in a while......

You aren't by chance a CFP are you, BD?

:wink:

Arjay

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Post subject: Re: I was wondering about that Fender IPO...
Posted: Fri Oct 04, 2013 6:44 pm
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Good article, thanks for posting Mike. 8)

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Post subject: Re: I was wondering about that Fender IPO...
Posted: Mon Oct 07, 2013 10:04 pm
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I do not read WSJ and keep up with market trends and financial issues etc so I can only speak from intuition but I think Fender is in a trap.

With respect to FMIC, can they continue to milk Mr. Leo's products with their cheaper imitations indefinitely? Granted, reissues practically saved the company in the 80's but can that go on?

The Fender guitar market is saturated with quality used instruments. Shop around and be patient and you can find MIAs for less that $600 and MIMs in the $200 range. How much does that affect the new guitar market?

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Post subject: Re: I was wondering about that Fender IPO...
Posted: Mon Oct 07, 2013 10:40 pm
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mhowell wrote:
With respect to FMIC, can they continue to milk Mr. Leo's products with their cheaper imitations indefinitely? Granted, reissues practically saved the company in the 80's but can that go on?

The Fender guitar market is saturated with quality used instruments. Shop around and be patient and you can find MIAs for less that $600 and MIMs in the $200 range. How much does that affect the new guitar market?


Last question first, at auctions on the southside of this city you can pick up new Mercedes for pennies on the dollar cash customers only. Will that hurt sales of new Mercedes, if anything it helps by keeping a desirable automoble in the public eye.
MH, are you asking if Fender will grow, yes perhaps not as fast as some would like but yes. You know my opinion about the "cheap imitation" misnomer, I can make 50 dollars playing a squire bullet just as easily as one of those mega-priced custom shop rigs. Set the guitar up then tune up and play, worry about cheap when you have 5K burning a hole in your pocket lol. 8)

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Post subject: Re: I was wondering about that Fender IPO...
Posted: Tue Oct 08, 2013 10:37 am
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mhowell wrote:
I do not read WSJ and keep up with market trends and financial issues etc so I can only speak from intuition but I think Fender is in a trap.

With respect to FMIC, can they continue to milk Mr. Leo's products with their cheaper imitations indefinitely? Granted, reissues practically saved the company in the 80's but can that go on?

The Fender guitar market is saturated with quality used instruments. Shop around and be patient and you can find MIAs for less that $600 and MIMs in the $200 range. How much does that affect the new guitar market?


I disagree about Fender being "in a trap." That would have been a more accurate assessment in 1985 though and I would have agreed more then. FMIC over the past 5 years has taken some very forward thinking steps to insure the future growth of the Fender brand. While budget import versions of the original Strats, Teles, Precisions and Jazzes have been and will continue to be part of their offerings, it is totally necessary because the market requires it. If Fender/FMIC doesn't have offerings in this price range others will fill the demand and FMIC loses the budget market.

After decades of re-Stratting the Stratocaster and re-Jazzing the Jazz Bass, in the past few years Fender has expanded their offerings in a way I've not seen since the early CBS era when they went in so many different and new directions in such a short time it was as if they were exploding with new ideas. Many of those CBS creations fizzled but were nonetheless creative and forward thinking.

In the past few years some real home runs have been hit you might have missed. The Jaguar Bass has been a good seller for example in all quality levels and price points.

Fender's ukulele line gained immediate respect in the uke community with one or more of their recently introduced models populating several "TOP 10" lists, especially those where value for the dollar is a primary consideration. The uke community is usually very slow to accept new offerings but embraced the Fender ukuleles very warmly. More warmly than the Gretsch ukes which to me are just as good in most regards. Granted this isn't a real high profit price point, but sell enough of them and you make money. The Fender ukes are selling well because they are really good ukes and the quality control on the uke line has been exceptionally tight. I don't know who was behind the uke project but they have obviously done a great job all around.

The Big Block P-Bass of 5 or so years ago was a non-traditional Fender electric bass that I count as a precursor to the recent introduction of the Dimension Series basses that are offered in a wide variety of models. Other than the fact they have 4 or 5 strings the Dimension is so unlike any Fender P or J bass that it is almost overwhelming. The Dimension evokes a Leo Fender flavored vision of a good electric bass, yet is as different from a P-Bass or J-Bass as a Stingray or an ASAT. If one could clone Leo Fender today and have this Leo clone design a new electric bass model taking into account all brands of professional basses that came before, I can see the new Dimension series being the result. It is very Leo-ish, yet cutting edge. Fender has made a multi-model commitment to the Dimension Bass at several price points. It will be around a long time, maybe forever.

In the past two years the Cabronita series has dressed up by dressing down and functionally refreshing several revered Fender guitar and bass models. I've really enjoyed the Cabronita direction. The Cabronita treatment emphasized simplicity of basic design from outward appearance yet are electronically refined internally so that they are tonally totally different from their inspirations.

The recently introduced Telecaster Thinline Super Deluxe is so unlike a Telecaster, other than the headstock shape, that I'd count that as a completely new model. It has some cosmetic elements of the old Thinline CBS era Teles but otherwise is a new design.

It isn't all new designs, as Fender has recently resurrected and updated the long discontinued Coronado and Starcaster series, neither being Leo Fender designs. The Pawn Shop and Modern Player series are both big sellers too.

Perhaps more important than new models is the forward thinking Fender displayed in the expansion into emerging markets over the past 2 years. Fender has moved into China in a bigger way than any other guitar maker or any other US based business it's size that I know about.

Like all US based brands that make some budget models in China, (or like the western marketed brands based solely upon Chinese made instruments like SX and Jay Turser who actually built the value reputation for Chinese guitars in the first place,) Fender moved into China for their manufacturing capacity and low cost for decent workmanship. However unlike any other brand, Fender has also built a distribution, dealer and support network within China on a scale unprecedented for a US based guitar company outside of North America. Fender is in a very unique position in China compared to any other western based guitar business.

It is easy to envision the same "marketing start-up" model Fender is successfully pulling off in China right now being replicated in markets like India plus even some former Soviet states where people with growing disposable incomes have a hunger for decent electric guitars and amps in the Fender flavor. The potential marketing opportunity in China and India is unprecedented and Fender seems to be the only US based electric guitar brand making more than a token effort at actually marketing and supporting their product in these emerging markets.

This global expansion is perhaps even more forward thinking than any new guitar design itself and has more long term earning potential than any new model would.

Far from being in a "trap" Fender has gone global and the long term potential financial rewards are astounding to contemplate from the expansion of the Fender way of doing business into emerging markets with little to no experience with a USA based brand. The global reach being initiated over the past 3 years is ultimately what will insure the brand's longevity and growth potential.

More intangible, yet perhaps even more valuable to global civilization as a whole, is the goodwill the Fender way of international marketing has the potential to create for other things American. This can not be undervalued. Yes, Fender has a chance to make a financial killing in emerging markets, but more than the earning potential from the sheer volume of consumers who happen to reside there Fender is bringing some of what is good about the west to places where the USA hasn't exactly been famous for doing good. They are in essence catching China up on 60 plus years of Fender's contribution to American music history and the overall "Fender-Lifestyle" if you will. This is not only good for Fender, but long term could be good for other USA based businesses and brands. It is even good for western music in general. If nothing else comes of it, then it is good for growing world understanding of what musicians have known in the west for over 60 years. Fenders make good music and good music can unite us all.

I honestly feel better about Fender's future now than at any point in the past 20 years. You can too.


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Post subject: Re: I was wondering about that Fender IPO...
Posted: Tue Oct 08, 2013 12:22 pm
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I'm very interested to see what Fender offers for online ordering. If they offer as many options as Carvin does, it will be a huge success. If all they do is offer a rehash of what is available on their stock models, than it will be a big ho-hum. At Carvin I can order most of their models with an ebony fb, ss frets, 22 or 24 frets, tremelo or tune o matic or string through. Lots of options to keep you dreaming. I hope Fender is smart enough to see the real potential.

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Post subject: Re: I was wondering about that Fender IPO...
Posted: Tue Oct 08, 2013 12:47 pm
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brotherdave wrote:
I honestly feel better about Fender's future now than at any point in the past 20 years. You can too.


As someone with the means to actually invest cash in FMIC's fiscal future, I share neither your outlook nor your enthusiasm.

Arjay

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Post subject: Re: I was wondering about that Fender IPO...
Posted: Tue Oct 08, 2013 1:03 pm
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Drew365 wrote:
I'm very interested to see what Fender offers for online ordering. If they offer as many options as Carvin does, it will be a huge success. If all they do is offer a rehash of what is available on their stock models, than it will be a big ho-hum. At Carvin I can order most of their models with an ebony fb, ss frets, 22 or 24 frets, tremelo or tune o matic or string through. Lots of options to keep you dreaming. I hope Fender is smart enough to see the real potential.


I'm not sure about that. Scarcity drives up value, not variety. Too much a-la-carte reduces value.
So while it can generate more volume, it doesn't necessarily mean more profit, and it certainly won't make a good investment if someone else can order the exact same next year.

I think I'd be happier if Fender reduced the number of offerings, but varied them more from year to year.
They're selling a dream, they're selling living history, and they're selling the user the feeling that he gets something special. If I eat at a buffet, I don't feel like I get something special, no matter how much I get to pick and choose.


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