Fender IPO, GC Risk, Bain, past connections on top!

[Thomas Erickson]

I'm sure no expert, but seems to me like it should only be good for small companies and independent luthiers making quality instruments and gear. I do like my old Fender bass, but I couldn't care less what happens to the company now. And GC... don't even get me started...

If anything, maybe if these toy companies were to go under we could get back to looking at musical instruments more as real tools of the trade, and not just another mass produced trinket or wall ornament.

[Ken Smith]

Originally Posted by Thomas Erickson

I'm sure no expert, but seems to me like it should only be good for small companies and independent luthiers making quality instruments and gear. I do like my old Fender bass, but I couldn't care less what happens to the company now. And GC... don't even get me started...

If anything, maybe if these toy companies were to go under we could get back to looking at musical instruments more as real tools of the trade, and not just another mass produced trinket or wall ornament.

Well, if you have ever been to a NAMM show you might see just that, toy companies. Much of the goods falling in that category. Maybe the 80/20 rule applies here. Maybe 20% or less actual quality goods at a show.

Fender is an Icon in the Music industry and I respect them regardless of their acquisitions and product mix. Had this been a better economy over the last 5 years, we wouldn't even be discussing then.

Many many years ago SWR (way before Fender bought them) put out a great ad. The title with pictures of several brands of basses (us included) said "Judge us by the company we keep".

Based on that slogan, GC and Bain capitol are like a Boat anchor pulling the ship down. If GC goes down, Fender will be hurt but not dead. Independent stores on the other hand might start to thrive again once GC goes down by the wayside. Real estate owners renting out the 100+ locations to GC will have loses. The 1,000s of people employed by GC part and full time will be hurt as well. All of the other vendors giving credit to GC will also loose money. Some companies might fold if they have too many eggs in that basket.

This isn't totally about Fender. It's really about associations and risk. The stock market is healthy for the most part but some industries are struggling. A Fender IPO might be interesting if they didn't have that monkey on their back! With all their various companies acquired, they are spread kinda thin.

When GC went public, they raised money to open more stores and put more mom and pop shops out of business. When they were spending more than they were making, they were starting to look bad on their bottom line. Before a huge stock downgrade from their financial position was disclosed (I think), they were bought or bailed out (in part of whole?) by Bain Capitol. With all the bad PR on Bain right now (much of it deserved I'm sure) and Mitt Romney running for 'Job Killer and Chief', I don't think this strong connection with GC and it's bad debt is all that good for Fender's IPO.

[Scott Pope]

Fender started by developing its own distribution network of small independent dealers through its own marketing department headed by Don Randall, decades ago, effectively creating their own markets. If GC goes down, which in my opinion would not be a great loss, Fender will find other marketing avenues. I refuse to be cynical.

[Ken Smith]

Originally Posted by Scott Pope

Fender started by developing its own distribution network of small independent dealers through its own marketing department headed by Don Randall, decades ago, effectively creating their own markets. If GC goes down, which in my opinion would not be a great loss, Fender will find other marketing avenues. I refuse to be cynical.

Yes, I agree. Some people I have spoken with believe that GC is like a Cancer in the MI business eating away at the small dealerships that built this industry in the USA.

[Scott Pope]

Ken, Thanks. That said, I must confess that I looked for a Gibson J45 acoustic guitar for over thirty years, for general playing and enjoyment, before I found the one for me with just the right combination of action and tone, and it did happen to be in the humidor at my local GC!

But the next part of how I paid for it confirms your above comment. After I had decided to purchase the guitar, knowing the local weather, I waited until a bad weather day, when the humidity was completely fouled up. I then went in, and, sure enough, it was having its temporary effect on all stock. I showed the inexperienced salesman the "tongue lift" that, "You know, I think I can work with it if you can give me a good deal." He gave me a significant discount, and I paid cash before he changed his mind. Of course, once home and properly humidified and set up, any "tongue lift" went right away, and I continue to enjoy the guitar.

[Ken Smith]

Fender started it's own accessory distribution for wholesale about 10 years ago or so. We became their 'Boutique' Bass String supplier. They would send us UPC labels and we would stick them on all the various sets they carried. We only have UPC's on a few sets so with some of the custom 5 and 6 string sets, they just made up their own UPC's and we stuck them on for them.

The top two distributors then in competition with them were Kaman (#1) and Musicorp (#2). Then, #1 bought or merged assets and forces with #2 becoming the biggest #1 with anyone else being a far distant #2 in the wholesale distribution game.

Shortly after that, Kaman/Musicorp merged with Fender, becoming like the ABC, NBC and CBS of Television all under one Team. At that time, Fender stopped carrying our Strings. Musicorp whom we had been selling strings to before would not continue offereng them due to the UPC issue and nor would they do with us what Fender had done, supply the labels in bulk for us to apply. We had been and are still selling them our Pro Formula Polish because we added a UPC code on the bottles and 6-pack boxes around that merge time.

So with all that happening on one side and the various brands bought up by Fender, the 2008 economic tumble was like getting hit from all sides. Adding the GC debt to all these Woe's makes Fender one not so happy Camper by the end of the day.

I do wish them a better future and would not be scared to jump into that IPO in some small way but at this time, Not even Fender thinks they are ready for Wall Street just yet.