Anybody seen this?

[Eddie Rondack]

Business Week Article

 

What does it mean for the guitar-buying public?

[Buc McMaster]

It means hang on to your Gibson guitars. Unlikely, but the Gibson we know and love (well, tolerate) could end up going under completely. Or it could be purchased by some corporate entity that doesn't know squat about guitar building (re the Norlin years)........or it could turn out to be just fine after this financial rough spot is cleared. Gads! It could even be purchased by Hartley Peavey! Either way, hang on to your Gibsons!

[RASHARU]

Means nothing to me. My Gibby's PRICELESS.. (to me, anyway).

 

My Breedlove Pro?.. now that's another story.

[Eddie Rondack]

I was on the verge of making a custom shop order... maybe I'll wait and see what happens.

[BigKahune]

Somebody's been cookin' the books and being naughty. :-

 

Gibson has really been stepping in it lately.

[ponty]

I am with Buc on this one. Buy your Gibson now! There is something not right at Gibson, may be they are going bust because they dont allow stores Fullers to advertise their products. Elderly dropped Gibson because of a law suit, strings no longer made in house, busted by the FBI over illegal wood. What next?

[Jinder]

This is sad news. I hope all turns out alright in the end! I can't imagine a world where I couldn't get my mitts on a new Gibson.

[MisterGibs]

Yes - sad & bad!

[albertjohn]

My 2 cents.

 

Manufacturers, be they car makers, steel producers, electronics or guitar makers will change hands all the time. Companies float on the markets and others will be taken back into private ownership. It's just the way the financial world works.

 

We've all seen some major shocks over the last 18 months. Who would have believed something like Lehman Brothers would ever go under and the shock waves are still being felt across the world, including the UK.

 

Gibson Guitars is a privately owned company and therefore the market for their shares is limited. The state of its finances currently means its unlikely to be floated so it could be sold, it could go to anyone from another big US guitar manufacturer or a private equity house with no experience. And anything in between.

 

They are carrying about $150m of secured debt, which sounds like a big number. But it will be secured against the real estate, equipment etc. My reading is that the problem is that the debt is due to be repaid/ due for review and they are struggling to re finance the loans.

 

In my business, I see this every day of the week. US, UK and other governments have pumped billions of $/£ of our money into the banks and they are not lending at the moment. People who were good bets 18 months ago are now high risk. It's a worldwide problem, except in China and India perhaps?.

 

The fact is, Gibson have some huge brands which will be worth huge amounts of money. In a worse case scenario of say a Chapter 11 etc, these are very valuable assets and can be sold on. The name Gibson will be around for many years to come but might be owned by someone else.

 

I think we have all learned that there are no sacred cows. Who knows, the day of a Chinese built Gibson may be upon us soon.

 

Hang on to your Gibsons. The recent period, it is generally accepted, produced some high quality gear which is clearly not guaranteed in the future. The much maligned Norlin era has produced gear that many of us here love, many don't. It's personal choice.

 

Interesting article. It's a shame they are not publically owned, then we would all be better informed.

 

Do private companies have to file accounts on a central register in the US? Does anyone have access? I'd love to cast my eye over them.

 

(This is the stuff we accountants get excited about - well one of them anyway!)

[bkharmony]

Would be a shame if they got bought up by Fender, like every other maker it seems.

 

I used to really respect the Fender brand, but their moves over the last 10-15 years make that a lot more difficult. Not that Gibson has been much better...

[Eddie Rondack]

I went ahead and made the custom order...

[thabesh]

albertjohn - no, it isn't possible to get a hold of a private, for profit company's financials here. There must be some serious issues at hand for them to delay the release of their statements though. If their lines are maxed out and there are covenant problems, we very well might be seeing the very beginnings of a "restructuring" of Gibson. It wouldn't be surprising that there are negotiations with the creditors going on as we speak. As you said though, it is a very valuable brand name so I'd bet we would be certain to see it continue on in one form or another. What that might look like though is anyone's best guess. My two cent's is that the marketing strategy of Gibson has been deeply flawed from the beginning and it's looking like the chickens are now coming home to roost.

[albertjohn]

albertjohn - no' date=' it isn't possible to get a hold of a private, for profit company's financials here. There must be some serious issues at hand for them to delay the release of their statements though. If their lines are maxed out and there are covenant problems, we very well might be seeing the very beginnings of a "restructuring" of Gibson. It wouldn't be surprising that there are negotiations with the creditors going on as we speak. As you said though, it is a very valuable brand name so I'd bet we would be certain to see it continue on in one form or another. What that might look like though is anyone's best guess. My two cent's is that the marketing strategy of Gibson has been deeply flawed from the beginning and it's looking like the chickens are now coming home to roost.

 

[/quote']

 

Agreed. I've re-read the article and noticed, as you rightly pointed out, that the 2008 audited accounts are not filed. That's seriously late and these things don't happen by accident. In the UK a company would be soon staring at a striking off action.

 

I can only speak from my experience regarding marketing in the UK, which is limited and anecdotal at best. Before they cancelled Rosetti's distribution contract, in 2008, there were far more Gibson acoustics advertised in mags, in shops and prizes from competitions. Since then, several retailers I have spoken to just don't like dealing with them and there are far fewer on offer. The prices have not gone either. Far from it. Not so electrics. This could be a question of economics as well but I do think their strategy had had a negative effect.

 

For me, I've always only wanted a Gibson acoustic so mine was an easy sale. But they won't turn themselves around with my money.

 

To be fair the downgrading is due to lack of information and they state that there is unlikely to be a problem with rescheduling the debt. I do hope so.