Fender Stock Sale Fails

Subject: Fender Stock Sale Fails
From: JohnInKansas
Date: 21 Jul 12 - 07:58 PM

Fender goes off-key, cancels its IPO

By Martha C. White
20 July 2012

Fender Musical Instruments Corporation failed to strike a chord with investors. The famed guitar maker scrapped its planned IPO less than two weeks after announcing an offering price.

"Current market conditions and concerns about economic conditions in Europe do not support completing an initial public offering at what we believe to be an appropriate valuation at this time," CEO Larry Thomas said in a statement. The proposed offering price of $13 to $15 would have valued the company at up to $395 million.

Analysts say Fender's financials didn't justify rock-star pricing.
"There wasn't demand enough for the premium they wanted," said Francis Gaskins, president of IPO Premium.

[more (a little) at the link]

The most interesting bit in the article may be the fairly decent picture at "Jimi Hendrix's 1965 Fender Stratocaster is displayed at the Idea Generation Gallery in London ..." Some here might want to know what it really looks like recently.

But of course it must be asked - "Did anyone know that Fender was offering to sell stock in their business?".

Comments in the article also suggest "Is it really still a business?".

Broader discussion of the general state of instrument makers' economic viability is welcome if anyone has information on the subject, although maybe this is just another "bit of almost news" as the IPO seems to have been treated by the business press.

John

Subject: RE: Fender Stock Sale Fails
From: GUEST,punkfolkrocker
Date: 22 Jul 12 - 12:23 PM

From a UK point of view:

Brand new Fender USA manufactured guitars & amps are way too expensive,
and every year far too many permutations of the basic Tele & Strat
are added to the new product catalogue;
while the previous year's are discontinued.

The high UK retail prices can not be justified or sustained in the face of competition
from equivalent quality but much cheaper guitars from other brands,
and Fender's own budget Squier product range.

Also 2nd hand Fender guitar's are a minefield of bodged DIY modded 'Partscaster' guitars
and variable quality counterfeits....


Look in any city branch of a big UK chain guitar store
and see the rows of unsold brand new Fender's priced around £1000 !!!

Subject: RE: Fender Stock Sale Fails
From: michaelr
Date: 22 Jul 12 - 03:05 PM

Fender did pretty well recovering from the disastrous days of CBS ownership. Problem is, they have way more competition now than before that time. I'm not sure how much of their production is still done in the US, but it's easy to see they would have trouble competing with products made in Southeast Asia.

That they were going public is news to me.

Subject: RE: Fender Stock Sale Fails
From: Ole Juul
Date: 22 Jul 12 - 09:55 PM

I think punkfolkrocker nailed it. Fender has the same problem that a lot of old companies suffer from these days.Their business model is no longer as relevant as it was (if at all) and they haven't come up with a new one. The fact that they tried this in a growth oriented market and at extra high value shows that they're not quite aligned with the world as it is now.