Tough Times for Harmon

[MUDSHARK]

Shares of consumer electronic company Harman International Industries (HAR 46.29, -22.68) have plummeted in this session's trade. The stock is down 33% after the company cut its full-year guidance well below analyst expectation. Shares were hit hard a few months ago after KKR and Goldman Sachs Group backed out of their planned $8 billion buyout of the company due to concerns about its business and financial condition. Shares are down 63% from their 52-week high

Harmon, Intl. is the holding company of such brands as Harmon-Kardon, JBL, Infinity, Crown, and AKG.

 

[stratman]

Rumours flew all over Wallstreet that after the books were given a very thorough overview the picture wasn't as rosy as first painted. It was also thought that Sidney Harmon was trying dump a hot potato. He managed to burn Proceed after taking over. Don't have much respect for the man's business ethics.

 

[fmw]

Bose and Monster make him seem like an angel.

 

[stratman]

Bose and Monster make him seem like an angel.

So very true.

 

[furrycute]

If Harmon folds, can we expect some closeout bargains?

 

[stratman]

If Harmon folds, can we expect some closeout bargains?

Hard to tell, they're part of Harmon International, they own many brands, some they let go into oblivion (Proceed) others live on their name alone (Mark Levinson), so who knows what they'll do, it'll be up to the retailers.

 

[furrycute]

I had a pair of Infinity Kappas (the newer model, not the old ones) some years ago. I liked them a lot. That was my first introduction to high end speakers, and as such, I have grown fond of Infinity. It's really too bad Infinity might fold because of this.

 

[stratman]

Yeah and Mark Levinson, they're expensive and exclusive.

 

[MUDSHARK]

There is little danger of the individual companies folding. The holding company would sell these assets to raise cash. This would be especially attractive to a competitor looking to gain market share or entry to a product type. Brands such as Infinity and JBL have great name recognition and many loyal customers. If the price was low enough the purchaser would buy earnings at a very reasonable multiple in the CISCO mold. Harmon acquired Infinity in just this manner (and made the original Infinty team very rich). The weak dollar would enable a foreign entity to purchase at an even further 20 percent discount. Perhaps you have read about foreign investors making deals to buy portions of investment banks lately.

 

[furrycute]

Thanks for the explanation. It's good to know that Infinity will live on. Ever since those Kappas, I have always been feeling warm and fuzzy towards Infinity

There is little danger of the individual companies folding. The holding company would sell these assets to raise cash. This would be especially attractive to a competitor looking to gain market share or entry to a product type. Brands such as Infinity and JBL have great name recognition and many loyal customers. If the price was low enough the purchaser would buy earnings at a very reasonable multiple in the CISCO mold. Harmon acquired Infinity in just this manner (and made the original Infinty team very rich). The weak dollar would enable a foreign entity to purchase at an even further 20 percent discount. Perhaps you have read about foreign investors making deals to buy portions of investment banks lately.

 

[jagxtype]

maybe they need to get their crap together and make some newer flagships to replace the AVR 745. Something with HDMI 1.3 or better and all the bells and whistles.

 

[MUDSHARK]

Funny you should write that. I was thinking today that this might explain reduced R&D by HK in regards to HDMI 1.3 and the new sound formats. Previously, HK had a reputation for passing the best picture by many accounts. Sadly, Onkyo, Marantz, and others have now passed them by.

 

[stratman]

There is little danger of the individual companies folding. The holding company would sell these assets to raise cash. This would be especially attractive to a competitor looking to gain market share or entry to a product type. Brands such as Infinity and JBL have great name recognition and many loyal customers. If the price was low enough the purchaser would buy earnings at a very reasonable multiple in the CISCO mold. Harmon acquired Infinity in just this manner (and made the original Infinty team very rich). The weak dollar would enable a foreign entity to purchase at an even further 20 percent discount. Perhaps you have read about foreign investors making deals to buy portions of investment banks lately.

I think this is a "best case" scenario, a foreign investor could come in due to the weak dollar and buy the whole enchilada, but remember they might spin off the brands perceived not to be hot sellers or just part everything and make more money selling the brands. No doubt there will be casualties. Chrysler finds itself under the same predicament right now, rumor has it that Cerberus has given Chrysler a certain amount of time, if they don't perform up to expectations Cerberus will part and sell the company, make a bundle and at the same time put thousands out of work, sad state of affairs.

 

[furrycute]

Didn't Ford sell the Jaguar and the Land Rover divisions to Tatar Motors of India?

 

[stratman]

Didn't Ford sell the Jaguar and the Land Rover divisions to Tatar Motors of India?

The sale isn't final and no new reports have been stated. Ironically a report that surfaced in Britain says that for the last 12 months Jaguar and Land Rover have become profitable turning around their combined balance sheet by 1.6 billion dollars, putting them in the black for the first time in a long time. Tata Motors of India has tendered an offer of about $2.05 billion and to think that Bill Gates can buy these and not blink an eye. Ford sold Aston Martin for $931 million, quite a paltry sum.

 

[furrycute]

Man, I would love to own a Land Rover Land Rover, regardless of where it is made. Hopefully, if Tata Motors buys Land Rover, they will make future Land Rovers more reliable. I read of a lot of complaints about Land Rover's reliability problems.

The sale isn't final and no new reports have been stated. Ironically a report that surfaced in Britain says that for the last 12 months Jaguar and Land Rover have become profitable turning around their combined balance sheet by 1.6 billion dollars, putting them in the black for the first time in a long time. Tata Motors of India has tendered an offer of about $2.05 billion and to think that Bill Gates can buy these and not blink an eye. Ford sold Aston Martin for $931 million, quite a paltry sum.

 

[jagxtype]

Jaguar is getting rid of the x-type which was the best selling car they have ever made...stupid move. The XF is said to compete, but i doubt it since it is more in the price range of the s-type.

 

[stratman]

Man, I would love to own a Land Rover Land Rover, regardless of where it is made. Hopefully, if Tata Motors buys Land Rover, they will make future Land Rovers more reliable. I read of a lot of complaints about Land Rover's reliability problems.

Tata Motors is a very peculiar company, it's part of a family owned conglomerate called Tata Group, they own hotels, jewelry stores, chemicals. My concern is engineering, they'll need to bring European experts to keep these cars in line with their heritage, not that I'm knocking Indian automotive engineers, but Jaguar always benefited from a racing program that distilled improvements into the production cars, Land Rover participated in rallyes and off road events geared for that type of vehicle, to make these brands "respectable" is going to take a lot of over the top marketing to alleviate the stigma of an "Indian" Jaguar, at least Ford kept the production in England, hopefully the Indians will realize it's the smart thing to do.

 

[Tomorrow]

Tata Motors is a very peculiar company, it's part of a family owned conglomerate called Tata Group, they own hotels, jewelry stores, chemicals. My concern is engineering, they'll need to bring European experts to keep these cars in line with their heritage, not that I'm knocking Indian automotive engineers, but Jaguar always benefited from a racing program that distilled improvements into the production cars, Land Rover participated in rallyes and off road events geared for that type of vehicle, to make these brands "respectable" is going to take a lot of over the top marketing to alleviate the stigma of an "Indian" Jaguar, at least Ford kept the production in England, hopefully the Indians will realize it's the smart thing to do.

Tata just introduced their new $2500 auto, the Nano I believe it's called. If they can truly develop a margin on that price, they're going to become a HUGE company. 1 in 1000 people in India currently own automobiles. Here comes L.A. style congestion to Delhi.

 

[masak_aer]

Tata Motors is a very peculiar company, it's part of a family owned conglomerate called Tata Group, they own hotels, jewelry stores, chemicals. My concern is engineering, they'll need to bring European experts to keep these cars in line with their heritage, not that I'm knocking Indian automotive engineers, but Jaguar always benefited from a racing program that distilled improvements into the production cars, Land Rover participated in rallyes and off road events geared for that type of vehicle, to make these brands "respectable" is going to take a lot of over the top marketing to alleviate the stigma of an "Indian" Jaguar, at least Ford kept the production in England, hopefully the Indians will realize it's the smart thing to do.

If they really takes on Jaguars, i would assume they are taking the experts as well. Have them train their own in-house/cheaper engineers for a few years. Before you know it, they'll be all over it. Jag customer service center will be someone in Calcutta picking up the phone. I know Microsoft is.