stein Posted March 14, 2016 Share Posted March 14, 2016 In other words, he ain't C.F. Martin IV, for better of worse. Nope. He ain't. I wonder though, what do the Martin's do when the company makes "extra" money? Link to comment Share on other sites More sharing options...
BluesKing777 Posted March 14, 2016 Share Posted March 14, 2016 Nobody has mentioned the loss of Ren Ferguson and the run on effects. Maybe it is still possible to beg him to come back? Glad I have my 2 Ren machines! And nobody has mentioned the Rosewood versus government events, and the guitars built with laminated bridges and fretboards and who knows what else, because they had no rosewood after it was consfiscated... Hard to live quality issues down with the internet looking.....harder to live down trying to sell guitars with lam necks and bridges without mentioning it to anyone buying them. BluesKing777. Link to comment Share on other sites More sharing options...
slimt Posted March 14, 2016 Share Posted March 14, 2016 Nobody has mentioned the loss of Ren Ferguson and the run on effects. Maybe it is still possible to beg him to come back? Glad I have my 2 Ren machines! And nobody has mentioned the Rosewood versus government events, and the guitars built with laminated bridges and fretboards and who knows what else, because they had no rosewood after it was consfiscated... Hard to live quality issues down with the internet looking.....harder to live down trying to sell guitars with lam necks and bridges without mentioning it to anyone buying them. BluesKing777. So true.. Link to comment Share on other sites More sharing options...
SmokeyGhost Posted March 14, 2016 Share Posted March 14, 2016 Ah the good ol' earnings before interest, taxes, depreciation and amortization (EBITDA) ratio. That is not profit after all expenses and, while it may seem really strange to the likes of Moody which did oh so well with its ratings for the sub-prime CDOs aka GFC, each of those items of interest, taxes, depreciation and amortization can change from year to year depending on their actual values at the time - or arcane accounting methods applied to them. Link to comment Share on other sites More sharing options...
'Scales Posted March 14, 2016 Share Posted March 14, 2016 If revenue has seen 5 fold increase over 5 years through consumer electronics acquisitions, then this can hardly be considered a 'guitar company' - it has transformed into a consumer electronics conglomerate with a guitar building division. The debt due might be covered through publicly listing or selling off part of the corporation. For the sake of example, you could sell the Gibson Guitars division to a wealthy investor/trophy hunter (say from India or the Middle East) and cover some debt requirements. Hypothetically that could be particularly attractive if say you'd had a poor sales year, thus building up a latent demand for product, then turned things around through popular changes to the range and had a much better sales year and being able to thereby show strong growth numbers. Hypothetically speaking of course. Link to comment Share on other sites More sharing options...
kidblast Posted March 14, 2016 Share Posted March 14, 2016 The downgrade comes on the heels of Gibson aggressively acquiring consumer electronics companies, including Onkyo, and shifting its strategy from focusing primarily on guitars and other instruments to more broadly becoming a music lifestyles company. I remember reading a while ago about the Onkyo acquisition, apparently a poor decision. company has been around for over 100 years, I don't think they will be going anywhere soon. Link to comment Share on other sites More sharing options...
fortyearspickn Posted March 14, 2016 Share Posted March 14, 2016 I guess I have trouble, with only one cup of coffee, differentiating between sarcasm and something else. To suggest someone at Gibson should go to jail for 'spending other people's money', because it's illegal - is spurious at best. The obvious fact is that companies use the money that their investors give them in hopes of getting more money in return. That money is given as either a loan or an investment, usually by purchasing stock offerings. People say - "I have an extra $1,000 and can put in under my mattress and get nothing, put it in the bank and get $5 at the end of the year, or invest it in a company I think is doing well and get $25 at the end of the year. They look at the risk of losing it all - bedbugs under the mattress, bank failure, or the company that has been doing well suddenly crashing. Then, some buy into a mutual group of companies to spread out that risk so if one company goes belly up, they don't lose as much. To suggest that borrowing money from investors is illegal aka stealing - implies that Capitalism is a moral evil. Any company that has 'brand recognition' that doesn't 'capitalize' on it, at least by selling branded merchandise - is actually poorly using the money their investors have lent them. Go to a Harley-Davidson store some day. Half their floor space is clothing, shot glasses and virtually anything else you can put a logo on. the other half their motorcycles. Both 'product lines' feed the other symbiotically. Money that is 'loaned' has a formal contract that Requires the company to pay it back - just like your home mortgage or auto loan. If it isn't repaid in the installment amounts specified on the dates specified - it is in default. At some point it goes through a legal process and then, and only then becomes 'illegal' and jail becomes an option. I'm guessing things in Germany are not too different than here. Even China is leaning towards this 'capitalistic' model. North Korea - not so much. J45Nick - I love that jacket. But, I'd change the tuners to Grovers. Link to comment Share on other sites More sharing options...
rct Posted March 14, 2016 Share Posted March 14, 2016 Ah the good ol' earnings before interest, taxes, depreciation and amortization (EBITDA) ratio. That is not profit after all expenses and, while it may seem really strange to the likes of Moody which did oh so well with its ratings for the sub-prime CDOs aka GFC, each of those items of interest, taxes, depreciation and amortization can change from year to year depending on their actual values at the time - or arcane accounting methods applied to them. Do you run your household at 8.5 times debt ratio? Do you encourage your kids to live like that? Can a person making 100k live at a debt load of 850K annually, with everything they own as collateral on that debt? How much of their income has to go to debt service? All of it maybe? How much profit does that leave? A company that far bent has to borrow to pay for the lights in the guitar factory. Moody has ensured that it will cost them so much to borrow that much money that they may just forgo the lights in the guitar factory, because debt increases debt after a certain bond rating. It really is something to think about. A private company like this one, similar to the one in California, may have to attempt going public, which will really point out their debt/equity, which is why Fedner isn't publicly traded. It's a symptom, a symptom of a company being used as a personal bank. You don't have to look far to see how that could possibly apply to Gibson. How is it that everyone in the guitar world loves to beat Guitar Center over the head for being over leveraged and all of the crap that goes with it, but hey, it'll be great at the picnic, all in our Gibson jackets and Gibson shirts! rct Link to comment Share on other sites More sharing options...
bobouz Posted March 14, 2016 Share Posted March 14, 2016 Sure would like to see Gibson prioritize the retention of quality staff. Link to comment Share on other sites More sharing options...
Hogeye Posted March 14, 2016 Share Posted March 14, 2016 the jacket.. Ill buy one. :D) The next time you stop by I will give you one. See you this summer. Maybe for Homecoming??? Link to comment Share on other sites More sharing options...
67texan Posted March 14, 2016 Share Posted March 14, 2016 I guess you folks just don't know any history about Henry's Gibson. Way back in the early 90's he had a tour wear division that made clothing. I have 15 denim jackets with various Gibson Acoustic logos and designs on them. I'm in my office right now wearing a great J-200 denim embroidered jacket. I have purchased leather jackets(4) and a water resistant jacket that I wear when I visit Seattle. I have more than 20 different baseball caps with Gibson logos on them and many coffee cups and insulated coffee mugs as well. Hell, I even have a Gibson wristwatch as well a trading cards and Christmas ornaments. I have a variety of Gibson sweatshirts and as many as 25 different T-shirts from the apparel division. Gibson had several "Lifestyle" cafes and showrooms in Memphis, New York, Seattle, L.A., Hollywood and other locations. There was a huge showcase at Opryland in Nashville. I drank in the Opryland bar/restaurant in Nashville (a lot) on various visits to the factory and even sent the bar manager a bottle of "Montana Redeye" for a display piece as they featured whisky from around the country. Todd the manager and I drank the bottle on a visit and I had to send him another. Great food and a super entertainment stage. Sam Bush played there on one of my trips to Nashville. Great show. I guess I'm just trying to say: Don't worry about Henry and the company they are just fine. If you find a guitar you like buy it. If not stop worrying. This has been going on for the last 25 or 30 years. Every year there is a new doom and gloom scenario and every year Gibson survives. Just remember Henry took the company from bankruptcy (Norlin) to what it is today. Anyone want to buy a jacket? Denim Gibson jacket ? PM sent Link to comment Share on other sites More sharing options...
'Scales Posted March 14, 2016 Share Posted March 14, 2016 Do you run your household at 8.5 times debt ratio? Do you encourage your kids to live like that? Can a person making 100k live at a debt load of 850K annually, with everything they own as collateral on that debt? How much of their income has to go to debt service? All of it maybe? How much profit does that leave? If it's for the roof over your head or an ostrich farm it could get sticky, but if it's for investment - hell yeah - if the income (rent, dividends etc) covers the costs of the investment (interest, inflation, tax..) and has prospect for capital growth (share price, house values..) then that leverage gives the person on $100k the opportunity to generate wealth at least to retire. IF (unlikely for many) they discipline themselves to just save the bit of ther $100k left after tax and living expenses and put in the bank, inflation will eat it up compared to interest gained. In other words - none of their salary income should service the debt, the income from the investment should service the debt and provide some profit, or they might use a little of their money if the capital growth prospects are good. Not too different to business. (IMO) Link to comment Share on other sites More sharing options...
rct Posted March 14, 2016 Share Posted March 14, 2016 If it's for the roof over your head or an ostrich farm it could get sticky, but if it's for investment - hell yeah - if the income (rent, dividends etc) covers the costs of the investment (interest, inflation, tax..) and has prospect for capital growth (share price, house values..) then that leverage gives the person on $100k the opportunity to generate wealth at least to retire. IF (unlikely for many) they disciple themselves to just save the bit of ther $100k left after tax and living expenses and put in the bank, inflation will eat it up compared to interest gained. In other words - none of their salary income should service the debt, the income from the investment should service the debt and provide some profit, or they might use a little of their money if the capital growth prospects are good. Not too different to business. (IMO) You don't go from three bs to a caa rating because your income can service your debt. In fact, the opposite. Poor quality, very high credit risk. Those aren't my words, those are the words of people that entertain the notion of buying their bonds, lend them money in other words. They've been rated that because as in your example above, they won't be able to service their debt on their acquisitions on the revenue generated by their acquisitions of late, yet each collateralizes the next. They were the acquisitions they were because they weren't making any money! rct Link to comment Share on other sites More sharing options...
'Scales Posted March 14, 2016 Share Posted March 14, 2016 You don't go from three bs to a caa rating because your income can service your debt. In fact, the opposite. Poor quality, very high credit risk. Those aren't my words, those are the words of people that entertain the notion of buying their bonds, lend them money in other words. They've been rated that because as in your example above, they won't be able to service their debt on their acquisitions on the revenue generated by their acquisitions of late, yet each collateralizes the next. They were the acquisitions they were because they weren't making any money! rct Possibly so rct, you definitely need a variety of strategies to manage the situation that you might get into - see my earlier (albeit somewhat tongue in cheek) post Link to comment Share on other sites More sharing options...
stein Posted March 14, 2016 Share Posted March 14, 2016 I am a little confused here. The way I read the report, it was 8.5 times annual revenue? Which in business, is still quite high. Can't really compare "business" with "household" when talking about value vs leverage. Especially with housing and prices being what they are (although, I don't think that is sustainable). My understanding is businesses are valued on the money they make, which is often much higher than the collateral. Household finances for most are nearly all collateral based, as far as leveraging and loans go. I'm more asking than telling. Link to comment Share on other sites More sharing options...
rct Posted March 14, 2016 Share Posted March 14, 2016 I am a little confused here. The way I read the report, it was 8.5 times annual revenue? Which in business, is still quite high. Can't really compare "business" with "household" when talking about value vs leverage. Especially with housing and prices being what they are (although, I don't think that is sustainable). My understanding is businesses are valued on the money they make, which is often much higher than the collateral. Household finances for most are nearly all collateral based, as far as leveraging and loans go. I'm more asking than telling. k. The business borrows, that's how they pay for stuff. Your bond rating helps determine the interest rate you will pay on the bonds. The higher the rate you have to give the bond market, the worse you are. The bond market wants safe places to park large amounts of money for a while, collect a little interest, get the principle back, lather, rinse repeat. When you are in the tens, hundreds of millions of dollars, 1.10%, 1.25% is a lot of money, it isn't what us chumps down here get at the credit union on our crummy savings account. I'm using small numbers here in order to show the large scale of the money we are talking about, I would imagine the actual rate they'd have to pay to be somewhat higher. But that risk is not what the bond market wants. Companies that enter bankruptcy often pay out less than pennies on the dollar on their bonds, and principle can be divided, meaning you don't even get back what you put in. So the company has a couple of really big payments coming, in this case the next two Decembers. So they will head right on up into November maybe, not even worried about it, because they'll sell some bonds in order to make those big obligations. But with a sinking rating there is great risk that you won't be able to raise the capital needed to meet those big payables. Sure, you delay them, sure you push them back, move money around between lines of business, and you cover them. For now. It is a bigger picture issue, that after you get to a certain point as a business, you can't sell any more debt and you can't buy any more stuff. The fact that you would have to do all of those things causes you to go from Caa1 down to Caa3, because you are too risky to lend to. On a scale of 0 - 10, 10 being best, our host is currently at 2, with not really anywhere to go but down in the near term. The next step after that is absolute junk, do not touch with any length pole. When the dudes that do this for a living look ahead, as they are tasked to do by whoever is in charge, and they see the ever growing ball of string, they quit. They are the ones that should have prevented it, they are the ones that will suffer for those above and around using the balance sheets as their own bank, and they are aware first. Sound familiar? rct Link to comment Share on other sites More sharing options...
stein Posted March 14, 2016 Share Posted March 14, 2016 k. The business borrows, that's how they pay for stuff. Your bond rating helps determine the interest rate you will pay on the bonds. The higher the rate you have to give the bond market, the worse you are. The bond market wants safe places to park large amounts of money for a while, collect a little interest, get the principle back, lather, rinse repeat. When you are in the tens, hundreds of millions of dollars, 1.10%, 1.25% is a lot of money, it isn't what us chumps down here get at the credit union on our crummy savings account. I'm using small numbers here in order to show the large scale of the money we are talking about, I would imagine the actual rate they'd have to pay to be somewhat higher. But that risk is not what the bond market wants. Companies that enter bankruptcy often pay out less than pennies on the dollar on their bonds, and principle can be divided, meaning you don't even get back what you put in. So the company has a couple of really big payments coming, in this case the next two Decembers. So they will head right on up into November maybe, not even worried about it, because they'll sell some bonds in order to make those big obligations. But with a sinking rating there is great risk that you won't be able to raise the capital needed to meet those big payables. Sure, you delay them, sure you push them back, move money around between lines of business, and you cover them. For now. It is a bigger picture issue, that after you get to a certain point as a business, you can't sell any more debt and you can't buy any more stuff. The fact that you would have to do all of those things causes you to go from Caa1 down to Caa3, because you are too risky to lend to. On a scale of 0 - 10, 10 being best, our host is currently at 2, with not really anywhere to go but down in the near term. The next step after that is absolute junk, do not touch with any length pole. When the dudes that do this for a living look ahead, as they are tasked to do by whoever is in charge, and they see the ever growing ball of string, they quit. They are the ones that should have prevented it, they are the ones that will suffer for those above and around using the balance sheets as their own bank, and they are aware first. Sound familiar? rct Oh yea, I'm on board with that. I get that aspect. Just trying to (out of pure curiosity) make a "guess" as to where Gibson actually is at, because credit ratings such as these, only are meant to tell a potential investor the facts, where the real situation could go either direction. What it LOOKS like to me, is Henry and the boys leveraged Gibson to buy failing companies, with hopes of making them turn a profit. What a responsible "credit rater" wouldn't do is make a determination that includes IF these companies can make a profit. Can't rate based on what isn't realized, or seen yet. In other words, can't always get the whole picture from credit ratings. They go on facts, rather then "feelings" or judgments. A situation like this could be, a money grab, bad decisions, or a lot of money being made. Based on the INTENTIONS of those in charge. On paper to a creditor, it all could look the same. What's it look like? My gut feeling is that Henry ain't trying to sell Gibson, (not at this point yet), and he ain't borrowing for a money grab. I think he intends to try and make a go of these companies he bought. We could argue that, of corse. I am thinking 50/50. Henry did good with Gibson, so that looks good. But also, Gibson has yet to make an acquisition turn around. That looks bad. Link to comment Share on other sites More sharing options...
TheGoodWife Posted August 23, 2016 Share Posted August 23, 2016 I guess you folks just don't know any history about Henry's Gibson. Way back in the early 90's he had a tour wear division that made clothing. I have 15 denim jackets with various Gibson Acoustic logos and designs on them. I'm in my office right now wearing a great J-200 denim embroidered jacket. I have purchased leather jackets(4) and a water resistant jacket that I wear when I visit Seattle. I have more than 20 different baseball caps with Gibson logos on them and many coffee cups and insulated coffee mugs as well. Hell, I even have a Gibson wristwatch as well a trading cards and Christmas ornaments. I have a variety of Gibson sweatshirts and as many as 25 different T-shirts from the apparel division. Gibson had several "Lifestyle" cafes and showrooms in Memphis, New York, Seattle, L.A., Hollywood and other locations. There was a huge showcase at Opryland in Nashville. I drank in the Opryland bar/restaurant in Nashville (a lot) on various visits to the factory and even sent the bar manager a bottle of "Montana Redeye" for a display piece as they featured whisky from around the country. Todd the manager and I drank the bottle on a visit and I had to send him another. Great food and a super entertainment stage. Sam Bush played there on one of my trips to Nashville. Great show. I guess I'm just trying to say: Don't worry about Henry and the company they are just fine. If you find a guitar you like buy it. If not stop worrying. This has been going on for the last 25 or 30 years. Every year there is a new doom and gloom scenario and every year Gibson survives. Just remember Henry took the company from bankruptcy (Norlin) to what it is today. Anyone want to buy a jacket? Link to comment Share on other sites More sharing options...
TheGoodWife Posted August 23, 2016 Share Posted August 23, 2016 I wanna buy a jacket. You got this one? Just missed it on ebay. My husband won one for selling guitars at Chuck Levin's in Wheaton, Maryland back in 1992. It was stolen. He also won a Fender jacket, which hangs in the closet, but he LOVED the Gibson jacket. Our 25th wedding anniversary is next month. I would love to surprise him. I'm not sure I'll have any luck finding one, but if you want to sell one, please let me know. I need a L/XL size. Thanks either way! Link to comment Share on other sites More sharing options...
blindboygrunt Posted August 23, 2016 Share Posted August 23, 2016 Come on guys ! One of you has one of these for a woman who obviously loves her man a lot . Sort it out Link to comment Share on other sites More sharing options...
Buc McMaster Posted August 23, 2016 Share Posted August 23, 2016 You'd probably do better to send Hogeye a private message on this.............he may or may not visit this thread again...... Link to comment Share on other sites More sharing options...
TheGoodWife Posted August 23, 2016 Share Posted August 23, 2016 You'd probably do better to send Hogeye a private message on this.............he may or may not visit this thread again...... Thanks, I couldn't figure out how to do that... Also, couldn't tell if a comment would notify him I had replied... So thank you for the info. I'll look again. =) Link to comment Share on other sites More sharing options...
TheGoodWife Posted August 23, 2016 Share Posted August 23, 2016 You'd probably do better to send Hogeye a private message on this.............he may or may not visit this thread again...... Thanks, I couldn't figure out how to do that... Also, couldn't tell if a comment would notify him I had replied... So thank you for the info. I'll look again. =) Oh DUH... I see it now. Thanks so much again... Link to comment Share on other sites More sharing options...
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