No Gibson at NAMM

Legionreturns

The interesting bit for me is Gibson's reading of the market. Choosing CES over NAMM clearly shows their sales strategy has moved to a slightly different target audience. 

Whilst I think @ICBMs comment about electronics brands and their ability to sell them to liquidate capital is certainly worth noting, presumably Gibson will still display guitars there. 

The big question is this: do they think that CES will have more impact on their target audience than NAMM? If so, they either think the music consumer market is changing and they have spotted a blinder and are about to announce some sort of massively inventive sector-changing guitar with a USB-C and wifi/Bluetooth interface, or they are at the point of utter desperation and they will try anything..

More people buy more electronic kit, more frequently than guitarists buy guitars. Most consumer electronics is obsolete before it breaks, roughly two years after you buy it. 

jellyroll

guitars4you said:

Yet the cost of exhibiting is high, taking into account flying 20/30 staff to NAMM + all the gear (be it trucked or flown) - hotel, wages, expenses, entertainment - Preparation of stock, marketing , promo etc etc etc - Time away from your own desk/office 

Exactly. At a time when they're seeking new finance, a $1m cost saving that flows straight to the bottom line and enhances profitability in the short term could be an important contributor to attracting that new funding.

IvisonGuitars

If ever there was a company had a brand that was so etched in the minds of musicians that didn't really need to exhibit at NAMM and could really do with saving the $xx,xxx dollars it'd cost to exhibit there, Gibson are it.

Teetonetal

This says more about the long term viability of NAMM to me than anything. Now that media is so immediate and current, launching product at an event, competing for space with 100 other companies launching product is just a quick way to get lost in the crowd. These things are slowly going to die.

Bridgehouse

Teetonetal said:

This says more about the long term viability of NAMM to me than anything. Now that media is so immediate and current, launching product at an event, competing for space with 100 other companies launching product is just a quick way to get lost in the crowd. These things are slowly going to die.

I disagree - the proliferation of YouTube "NAMM review" videos from all the biggies around the world has, if anything, made it more relevant to the wider world.

Trade shows used to be about trade buyers - which they still are - but this is even more about the end consumer than it ever was.

Imagine how many "we would do a Gibson review, but, er, they aren't here.."

Modulus_Amps

I have heard a number of manufacturers moan about the current NAMM experience and know a number of people that have chosen not to get a stand and have opted out.

It is not just Gibson that is struggling though.....

Quote - "Guitar Center is minutes from default and downgraded to junk status. Gibson is liquidating, also minutes from default and downgraded. Fender closed their EU HQ. Carvin is gone after over 50 years. Marshall doesn't even have an amp designer. Many more brands will not survive this phase"

cj73

ICBM said:

This is because Gibson's only viable survival strategy is to maximise the value of its consumer electronics brands - particularly Philips - and then sell them off, to try to cover the over half a billion dollars worth of debt it has to somehow refinance before August 1st... or it's all over.

I'm no super stock broker, business expert but if a few people on a UK guitar forum know that Gibson is in the mire then why would anyone buy their offshoots for top dollar?  The vultures may be circling but they'll wait till the beast dies surely, and pick up the scraps?

Plectrum

Modulus_Amps said:

I have heard a number of manufacturers moan about the current NAMM experience and know a number of people that have chosen not to get a stand and have opted out.

It is not just Gibson that is struggling though.....

Quote - "Guitar Center is minutes from default and downgraded to junk status. Gibson is liquidating, also minutes from default and downgraded. Fender closed their EU HQ. Carvin is gone after over 50 years. Marshall doesn't even have an amp designer. Many more brands will not survive this phase"

Err Marshall do have amp designers and they're also making good profits with a healthy £8 million cash reserve and no debts. But even they have apparently booked a smaller stand at this year's NAMM than they traditionally have.

ICBM

cj73 said:

I'm no super stock broker, business expert but if a few people on a UK guitar forum know that Gibson is in the mire then why would anyone buy their offshoots for top dollar?  The vultures may be circling but they'll wait till the beast dies surely, and pick up the scraps?

That's also true. I suspect they're stuffed, basically.

I'm not a stockbroker either, but the writing does appear to be on the wall. This is from last year, but I haven't heard anything that would indictate they've magicked half a billion dollars up from somewhere yet...

https://www.thestreet.com/story/14280618/1/gibson-guitar-may-default-if-company-can-t-refinance-its-debt.html

Of course if you're the owners then perhaps a better strategy would be to hang onto Philips, if it's profitable... and sell off Gibson.

ThorpyFX

Onkyo make awesome stuff, they are competitive in the home audio world so i assume profitable and worth selling? 

Telejester

ThorpyFX said:

Wow even my little company is going to NAMM- we must be doing better than GIBSON! 

Thorpy your stuff doesnt have a long history for issuing items for sale which are awash with flaws.................big difference

jeztone2

guitars4you said:

ThorpyFX said:

Wow even my little company is going to NAMM- we must be doing better than GIBSON! 

reminds me of around 10 years ago after Academy of Sound had been purchased by Sound Control, then less than 2 years made a loss of over 6 digits, prior to going bankrupt - A few days later, at guitar show, I sold a set of Martin strings for around £4, made around £1 profit and was chuffed to bits to report that my store made more profit today than a 20 store empire had made in 12 months

Sound Control were dreadful though. They seeemed to forget that gigging musicians buy accessories. So they never had anything I needed to buy. I remember going in to get a proper speaker lead (from head to cab) after mine got nicked at a gig, and they looked at me like I was a Martian. The most heard phrase in my local one was “Out of stock til Thursday mate”.

PMT in Nottingham are in danger of that, they’ve got all the big dollar stuff. But when I’m gigging. The cost of strings, plectrums, cables, bits and bobs and servicing amps runs to like £400 a year or more. Look at HotRox. They’ve ridden out the last recession purely by offering a comprehensive range of pedals and pedalboard bits. The very stuff that a lot of retailers ignore. 

Jez6345789

I am not aware of how Namm is run but been involved in a few US trade shows over the years and the ones with unionised labour are ludicrously expensive.

i  probably think all the business comments here are right about fattening up the bottom line and selling off bits to pay debt later in the year.

sadly guitars are a small part of their problems these days.

rsvmark

Slightly off topic but the issues affecting NAMM are not unique to the guitar/music industry. All major trade shows appear to me at least to have suffered gradual erosion in scale. Remember the car show at the NEC? Folded. The bike show? Still limps on but suffers from the same issues. If it wasn't for the retailers looking to shift old stock that too would fold.

These events are chuffing expensive to participate in and I am guessing that alternative marketing channels (FB, yt, etc) may be more cost effective. The imperative to attend national/international trade shows to maintain a presence on the national/world stage is less clear these days imo 

maltingsaudio

As pointed out if you wish to maximise your marketing budget, then blowing a very large proportion on one show which may be not as profitable as we believe isn’t a great idea. It also seems to me that the coverage of NAMM tends to concentrate on new niche products as opposed to established brands so the bean counters probably think the money is better spent On targeted promotion as opposed to one big bash.

i don’t think Gibson Guitars will disappear anytime soon in real terms, though maybe the guitar division of Gibson may come under new corporate ownership....... bet your life if it did ever come up for grabs Uli Behringer would buy it!

darthed1981

ThorpyFX said:

Onkyo make awesome stuff, they are competitive in the home audio world so i assume profitable and worth selling? 

I guess it depends who else would want their IP and/or brand, would have the cash, and wants to go into that market.

Their big competitors would probably be out as they already do it all, so the best bet would be a Chinese company who want the brand. 

They also apparently own a majority stake in TEAC, and a controlling stake in Philips...

Crazy, crazy acquisitions.  Just pay the tax next time Gibson!

darthed1981

ICBM said:

cj73 said:

I'm no super stock broker, business expert but if a few people on a UK guitar forum know that Gibson is in the mire then why would anyone buy their offshoots for top dollar?  The vultures may be circling but they'll wait till the beast dies surely, and pick up the scraps?

That's also true. I suspect they're stuffed, basically.

I'm not a stockbroker either, but the writing does appear to be on the wall. This is from last year, but I haven't heard anything that would indictate they've magicked half a billion dollars up from somewhere yet...

https://www.thestreet.com/story/14280618/1/gibson-guitar-may-default-if-company-can-t-refinance-its-debt.html

Of course if you're the owners then perhaps a better strategy would be to hang onto Philips, if it's profitable... and sell off Gibson.

Or wait until the whole thing goes tits up and then pick the carcass for cheap? 

With 500 million in debts and revenue of 1.7 billion the company mostly needs to really hammer down it's costs to service and run down the debts.  

Not going to NAMM (a big jolly for most people who go, like most industry events) will be as much sending a signal to cut expenses as it is a sign of disaster.  After all, there is no need for more awareness of Gibson in the guitar world?

impmann

darthed1981 said:

ICBM said:

cj73 said:

I'm no super stock broker, business expert but if a few people on a UK guitar forum know that Gibson is in the mire then why would anyone buy their offshoots for top dollar?  The vultures may be circling but they'll wait till the beast dies surely, and pick up the scraps?

That's also true. I suspect they're stuffed, basically.

I'm not a stockbroker either, but the writing does appear to be on the wall. This is from last year, but I haven't heard anything that would indictate they've magicked half a billion dollars up from somewhere yet...

https://www.thestreet.com/story/14280618/1/gibson-guitar-may-default-if-company-can-t-refinance-its-debt.html

Of course if you're the owners then perhaps a better strategy would be to hang onto Philips, if it's profitable... and sell off Gibson.

Or wait until the whole thing goes tits up and then pick the carcass for cheap? 

With 500 million in debts and revenue of 1.7 billion the company mostly needs to really hammer down it's costs to service and run down the debts.  

Not going to NAMM (a big jolly for most people who go, like most industry events) will be as much sending a signal to cut expenses as it is a sign of disaster.  After all, there is no need for more awareness of Gibson in the guitar world?

I'm not sure I agree with you about NAMM being a "jolly". Its fucking hard work, incredibly noisy and you feel genuinely beaten up when you crawl back to your hotel after 9-10hours on your feet.

FWIW, not going to NAMM *is* a big deal for any of the big guns. Its a sign of weakness, its a sign that things aren't good. As a result, this will reflect within the market - I'm not talking about us, the consumers, I'm talking about the bigger picture. NAMM isn't just about showcasing or raising awareness, its about showing the music industry your corporate face too. A lot of dealer/distributor activity goes on at these events (NAMM and Frankfurt) and the sales generated are highly significant parts of the overall yearly sales totals for most manufacturers. To not be there will cost them sales - no question - at a time that they can ill afford it.

In my opinion this is either an ill-judged cost saving excercise driven by someone who doesn't know the industry or a sign that things are *REALLY* bad.

ICBM

impmann said:

In my opinion this is either an ill-judged cost saving excercise driven by someone who doesn't know the industry or a sign that things are *REALLY* bad.

Either, or both, are likely.

Gibson's current owners are clueless. If they didn't have the heritage of the brand and its iconic designs to cover their appalling management and terrible product decisions they would have gone down the pan years ago. What have they done that's new in the last twenty years that's been really well-recieved?

For what it's worth I felt the same about Marshall until very recently - but they seemed to have turned it around now, they're profitable and are in surplus, not debt. The difference is that they're a tiny operation by comparison.

jellyroll

impmann said:

I'm not sure I agree with you about NAMM being a "jolly". Its fucking hard work, incredibly noisy and you feel genuinely beaten up when you crawl back to your hotel after 9-10hours on your feet.

FWIW, not going to NAMM *is* a big deal for any of the big guns. Its a sign of weakness, its a sign that things aren't good. As a result, this will reflect within the market - I'm not talking about us, the consumers, I'm talking about the bigger picture. NAMM isn't just about showcasing or raising awareness, its about showing the music industry your corporate face too. A lot of dealer/distributor activity goes on at these events (NAMM and Frankfurt) and the sales generated are highly significant parts of the overall yearly sales totals for most manufacturers. To not be there will cost them sales - no question - at a time that they can ill afford it.

In my opinion this is either an ill-judged cost saving excercise driven by someone who doesn't know the industry or a sign that things are *REALLY* bad.

If they don't manage to re-finance, the long term impact on sales irrelevant - they'll be gone. From their management's perspective, far better to slash marketing costs and improve short term profits in order to tempt investors/lenders with less stringent debt covenants. The worse their profits immediately prior to re-financing, the higher the perceived risk for a lender and the therefore the higher the cost of borrowing becomes.