Is Gibson In Financial Trouble?

There are signs that Gibson's move to diversify isn't working out as planned. Moody's Investor Service has downgraded Gibson Brands (formerly Gibson Guitar Corporation) credit to junk status, and according to reports, the company has put up two of its Nashville warehouses for sale as a result.

Moody's gave 3 reasons for the downgrade:

   1. "Weak operating results" as a result of a poor reception to the company's 2015 guitar line.

   2. Frequent management changes in its finance department.

   3. The company's recent move into consumer electronics and the associated risks of doing so.

Starting in 2012, Gibson began to buy consumer electronics company like Onkyo and Teac. Prior to that, it had purchased the Stanton Group, which included Cerwin-Vega, Stanton DJ and KRK. In 2014 the company acquired Woox, a Singapore-based company specializing in consumer electronics accessories.

According to an article by Ted Green, this most recent acquisition left the company over-leveraged and the company is facing $100 million in payments over the next 22 months. Speculation is that the company doesn't have the cash to make these payments, which is the reason for the sale of the two Nashville warehouse properties.

Gibson has done a number of business maneuvers in the last few years that have been head-scratchers, but the fact of the matter is that the company is trying to grow by expanding beyond MI. The problem there is that unless you know the other markets well, it's very difficult to play in the land of the really deep pockets. Let's see what happens over the next few months.

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NAMM 2013 Overview Part 4 - The Oddities

One of the best parts about NAMM is some of the things you see on the floor that don't seem to fit into any category. Most of these are usually found in what's affectionately known as "Inventors Row" down in the basement in Hall E. It's also sometimes known as "The Chapter 11 Hall," meaning that most of the exhibitors will probably be out of business by the time NAMM comes around again next year. I don't know about that so much, but here are a number of unusual offerings that caught my eye.




Here's a number of guitars that had their bodies made by a 3D printer. The company that made these is called 3D Systems, and they won "Best of Show" from Yahoo Finance. If you don't know already, 3D printing is the future. Just like everyone had to have a real printer in 1990 and a cell phone a decade later, the same will happen in the 3D world. You've been warned.












Next we have an interesting rotary key instrument that shrieked like a banshee as it was actually electric and plugged into a distorted amp. Didn't get the name of the company since I was so befuddled.









Teac (the mother company of Tascam) presented an interesting version of a boombox (or maybe it's a clock radio?) with retro styling. I didn't know that people still bought these things.















Now for something completely practical. Here's a USB flash drive duplicator from EZ Dupe. Want to get your music out there? No one can refuse a free flash drive.












Here's one of the weirder ones. It's a gallery of artist in-ear monitors by Ultimate Ears (I think). I'm not so sure that I want to know what the ear canal of my favorite music celeb or athlete is like.











Finally, here's a display for "man-made ivory" picks that are harmonically tuned to suite your music by TUSQ. Don't know how much of that I buy, but they felt pretty good, and at least they have some out-of-the-box marketing.


That's it for this year's NAMM show. Now that January's near over, we can all get back to business.

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