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Share price drop?

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expoman
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expoman Posted: Fri, Mar 22 2013 4:59 PM

Was there some B&O news out today that caused a 15% drop in the share price?

9 LEE
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9 LEE replied on Fri, Mar 22 2013 5:11 PM

Second profit warning.

Closing all the dealers they did/are has proven more expensive than first thought, apparently..

Lee

expoman
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expoman replied on Fri, Mar 22 2013 5:26 PM

If your compare first and second quarter reports Beoplay sales are flat.  However the core A/V product sales dropped 25% and automotive dropped 23%.

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moxxey replied on Fri, Mar 22 2013 10:10 PM

9 LEE:

Second profit warning.

Closing all the dealers they did/are has proven more expensive than first thought, apparently.

Maybe I'm wrong, but I'm assuming B&O have to pay for ceasing a dealer's contract, plus buy back stock and fittings?

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vikinger replied on Sat, Mar 23 2013 10:20 AM

moxxey:

9 LEE:

Second profit warning.

Closing all the dealers they did/are has proven more expensive than first thought, apparently.

Maybe I'm wrong, but I'm assuming B&O have to pay for ceasing a dealer's contract, plus buy back stock and fittings?

UK seems to have a mixture of franchised dealers and dealerships directly owned by B&O UK. The directly owned dealerships are, I believe, former franchises that failed to meet targets and were handed back under the terms of the franchise contracts. So in the case of the latter, B&O will have been in receipt of a funded operation, albeit with committed running and premises leasing costs.

Leases often run on a 7 year basis, and at the end of the 7 years landlords can be stupid and demand an unrealistic increase, tipping the business into a closing situation and leaving the landlord with empty premises. Presumably, if a franchise store is owned by a limited company, it can fold and default on leasing commitments. If, on the other hand, B&O triggers the closure itself by ending a franchise, you would imagine that they should pay for fittings and other costs. If the franchise is part of a multi AV business and not exclusively B&O, then it must get complicated. I can imagine the most vulnerable stores to be those owned by B&O that are getting near to the end of their premises leases, unless, of course, they are in good locations turning in good profits.

Graham

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moxxey replied on Sat, Mar 23 2013 10:27 AM

I see B&O's profit warning is featured in The Times, today. Says they expected to make a profit in 2013, but instead will record a £23 million loss.

Says B&O is blaming a downturn in luxury goods purchasing through Europe and that it has affected B&O's expected recovery.

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StUrrock replied on Sat, Mar 23 2013 11:26 AM
vikinguk:

UK seems to have a mixture of franchised dealers and dealerships directly owned by B&O UK. The directly owned dealerships are, I believe, former franchises that failed to meet targets and were handed back under the terms of the franchise contracts. So in the case of the latter, B&O will have been in receipt of a funded operation, albeit with committed running and premises leasing costs.

Leases often run on a 7 year basis, and at the end of the 7 years landlords can be stupid and demand an unrealistic increase, tipping the business into a closing situation and leaving the landlord with empty premises. Presumably, if a franchise store is owned by a limited company, it can fold and default on leasing commitments. If, on the other hand, B&O triggers the closure itself by ending a franchise, you would imagine that they should pay for fittings and other costs. If the franchise is part of a multi AV business and not exclusively B&O, then it must get complicated. I can imagine the most vulnerable stores to be those owned by B&O that are getting near to the end of their premises leases, unless, of course, they are in good locations turning in good profits.

Graham

At the moment closures seem to be voluntary rather than B&O enforced.
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I know this was a year ago, but and if it's still open good new for emerging markets. 

http://www.youtube.com/watch?v=yEgsPwTqlrA

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SWISS_2 replied on Sat, Mar 23 2013 3:38 PM

Guilty as charged.

I was able to negotiate a 15 % discount on a new Beoport yesterday. Just doing my bit to keep the company afloat.

Sorry all.

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Pushkin replied on Sat, Mar 23 2013 8:53 PM
It's not just the losses that are the issue. A company that works closely with mine is advising B&O on its cash flow. The actual losses (as opposed to the predicted profit) are of course connected to cash flow but liquidity is key to survival and b&o have some issues which i understand may impact on s,e of the new product developments which is a real shame.
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StUrrock replied on Sat, Mar 23 2013 9:30 PM
Pushkin:

It's not just the losses that are the issue. A company that works closely with mine is advising B&O on its cash flow. The actual losses (as opposed to the predicted profit) are of course connected to cash flow but liquidity is key to survival and b&o have some issues which i understand may impact on s,e of the new product developments which is a real shame.

Pushkin, it is often said that bad cash flow to a business is like a heart attack.

In your opinion do you think, if this is the case, that B&O can be resuscitated and brought back to life?
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Pushkin replied on Sat, Mar 23 2013 11:12 PM
StUrrock:

Pushkin, it is often said that bad cash flow to a business is like a heart attack.

In your opinion do you think, if this is the case, that B&O can be resuscitated and brought back to life?

I certainly hope so because there is a place for this company. It will come down to whether the financiers continue to believe in management or whether they feel it is throwing good money after bad. When looking into the numbers it would appear that audio (speakers - automotive and consumer) are core and can make money but video is not a winner (ironic given most seem to feel their TVs are uncompetitive in terms of price). Will be interesting to see whether the company recognise this and focus on its strengths.
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expoman replied on Sun, Mar 24 2013 12:38 AM

As I said in another thread "Will B&O be more than just a car and home speaker manufacture in five years?"  

 

Stores that only sell speakers could be hard to keep interesting.  Oh wait that's "Bose"

 

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But they sell sound systems, earphones and a television too!

Beosound Stage, Beovision 8-40, Beolit 20, Beosound Explore.

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StUrrock replied on Sun, Mar 24 2013 7:31 AM
Pushkin:

When looking into the numbers it would appear that audio (speakers - automotive and consumer) are core and can make money but video is not a winner (ironic given most seem to feel their TVs are uncompetitive in terms of price). Will be interesting to see whether the company recognise this and focus on its strengths.

Since B&O loudspeakers are rarely sold to people with non-B&O TVs or Music Systems, if they pull the plug on TV production it will surely mean the end for most if not all of the specialist shops.

It is my understanding that the management, behind the scenes, are also very disappointed with B&O Play sales figures.

Is this the beginning of the end for our beloved brand?
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moxxey replied on Sun, Mar 24 2013 8:05 AM

expoman:

Stores that only sell speakers could be hard to keep interesting.  Oh wait that's "Bose"

That's why there are only a handful of flagship Bose stores. Eight or so in major cities?

A Bose store was due to open here in Bath (an area which houses typical Bose customers). They ran joint promotional marketing with the new Southgate centre and even added a sign to their store. Never opened!

Strangely, there are as many Bose 'Factory Outlet' stores as there are regular stores!

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vikinger replied on Sun, Mar 24 2013 8:06 AM

The financial situation with world economies is looking very serious, and Cyprus could be the tipping point.

B&O was founded in the roaring 20's and rode out the 30's depression very successfully through innovation in a rapidly changing market. Can they pull it off again?

Graham

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elephant replied on Sun, Mar 24 2013 8:42 AM
moxxey:

That's why there are only a handful of flagship Bose stores. Eight or so in major cities?

A Bose store was due to open here in Bath (an area which houses typical Bose customers). They ran joint promotional marketing with the new Southgate centre and even added a sign to their store. Never opened!

Strangely, there are as many Bose 'Factory Outlet' stores as there are regular stores!

I don't understand why B&O can't beat Bose at their own game ... Look at the new Bose speaker to go with "any" TV - adds 'superior' sound and even acts as a plinth for the TV ... Could/Should have a BL7.x repackaged !

BeoNut since '75

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vikinger replied on Sun, Mar 24 2013 8:59 AM

moxxey:

Strangely, there are as many Bose 'Factory Outlet' stores as there are regular stores!

Yes, I seem to recall that the factory outlet at Cheshire Oaks on the Wirral was their first, and that was back at the time that you could only buy Bose by mail order.

All the factory returns went to Cheshire Oaks. Presumably they would mostly have been units that buyers were dissatisfied with..... having discovered the really cheap looking plastic that the Wave Radio was (and still is) made from, and that wasn't revealed by the mail order illustrations!

 Incidentally, I've got one of those early Wave Radios, and it is still going strong with wonderful sound output. I just hate the close-up look and feel of the thing . For what they charged they could have had a B&O quality case (and much less profit).

Graham

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Frederic replied on Sun, Mar 24 2013 1:06 PM

Anyone can read this of give a synopsis: http://www.ft.com/cms/s/3/3bbba4d6-9307-11e2-b3be-00144feabdc0.html

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StUrrock replied on Sun, Mar 24 2013 1:36 PM
http://www.bang-olufsen.com/UserFiles/File/Investor/BO_1221_UK_F.pdf
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Puncher replied on Sun, Mar 24 2013 1:41 PM

Tracking an old groove I know but.............target middle-class, professional types rather than soccer players, Russian\Chinese\gangsters\nouveau riche, and set prices accordingly!

If cash is tight, don't spend it developing silly docks for iPads that can change at a moments notice,  spend it on best bang for bucks products - making a respectable entry in the "serious" earbud and proper (assuming they are real "hifi" rather that "Beats" equivalents) headphone market is a good step forward!

Ban boring signatures!

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moxxey replied on Sun, Mar 24 2013 2:32 PM

flx:

Anyone can read this of give a synopsis: http://www.ft.com/cms/s/3/3bbba4d6-9307-11e2-b3be-00144feabdc0.html

No-one can read that, apart from the title, unless they are a Premium subscriber. Can anyone paste (some) of the text? A synopsis?

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moxxey replied on Sun, Mar 24 2013 2:38 PM

StUrrock:
http://www.bang-olufsen.com/UserFiles/File/Investor/BO_1221_UK_F.pdf

Irony here is that that BeoPlay products are the fastest growing sector (DKK 162 million up from DKK 78 million for the same period the previous year) for B&O, yet most people on here spend their time telling B&O it's an area they should drop and concentrate on their "core values" (where the report clearly shows that the core AV revenue was down to DKK 362 million from DKK 559 million in the same quarter the previous year - which by my reckoning is a drop of a staggering 63%). Oops!

I've also translated this, which doesn't look good, from a Swedish interview with Tue: Worried the company has always been at the television business. "TV is really difficult," said company president Mantoni had in December said in an interview with the Swiss business magazine "balance". "In the last ten years, we earned no money."

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otwo replied on Sun, Mar 24 2013 3:28 PM

also a big problem is the auto motive sector. Mercedes is switching from B&O to Burmeister which deliver same quality but less expansive....Other Automotive brands could switch..

 

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StUrrock replied on Sun, Mar 24 2013 3:39 PM
With regards to Play, where are all the sales coming from?

Dealers I speak to only sell small amounts and I hear from B&O usa representatives that product returns from online sites are high.

Have B&O sold large numbers of units to online sellers such as Apple, Amazon etc? In order that they can sell the products.

If so, the sales figures in the first year of this third party sales of B&O products could be distorting the overall figures.

This is even more worrying as next years figures of Play sales could completely collapse as online retailers fail to re-order due to having warehouses full of old stock.

vikinger
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vikinger replied on Sun, Mar 24 2013 3:41 PM

moxxey:

flx:

Anyone can read this of give a synopsis: http://www.ft.com/cms/s/3/3bbba4d6-9307-11e2-b3be-00144feabdc0.html

No-one can read that, apart from the title, unless they are a Premium subscriber. Can anyone paste (some) of the text? A synopsis?

if you register you get a few free views per month.

Doesn't copy and paste too well but here it is:

High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights.http://www.ft.com/cms/s/3/3bbba4d6-9307-11e2-b3be-00144feabdc0.html#ixzz2OTKNyObH

March 22, 2013 8:06 pm

Bang & Olufsen: above the sound waves

Difficult for Danish company to justify high prices for equipment

Bang & Olufsen’s share price chart looks a bit like a sound wave. The last peak came during the build up to the financial crisis and since then it has rolled over hard. At Dkr52, shares in the Danish audio and visual electronics group are less than a tenth of their value in 2007. A profit warning on Friday sent the stock down another 12 per cent.

More

ON THIS TOPIC

LEX

Surround sound systems and televisions are Bang & Olufsen’s biggest segment accounting for more than half of sales. The problem is that when the global economy is on mute it becomes harder to justify the remortgaging of the house for a £4,000 television or a £600 radio. And Bang & Olufsen has been slow to move away from the region suffering the most – it derives almost three quarters of revenues from Europe. The company is trying to move into China and the US but this is only happening slowly. Granted, some parts of its business such as speakers and headphones for portable digital gadgets, and sound systems for Aston Martins, are doing well. But these areas are still not large enough to counter revenue declines in its main business.

Furthermore, Bang & Olufsen’s annual revenues of just $520m a year are just 1 per cent of Sony’s. That gives it no scale in a competitive market. It also means fewer funds to spend on research and development. Sony spends just 6 per cent of its revenues on R&D, yet this $5bn is one hundred times more than Bang & Olufsen spends. That makes it even more difficult for the Danish company to persuade its customers that its televisions and sound systems are significantly better for the price. Nevermind that the $58m it spends on R&D annually is 11 per cent of its revenues.

All that makes chief executive Tue Mantoni’s ambitions look fanciful. In 2011 his hope was to increase annual revenues to Dkr10bn by 2016 – which would require them to grow by an average 30 per cent. Yet this year, which ends in May, revenues will come in at Dkr2.9bn, the same level as 2011. Meanwhile, an expected loss before earnings, interest and tax is a long way short of Mr Mantoni’s target for 12 per cent ebit margins by 2016. Bang & Olufsen will be lucky if its share price chart keeps resembling a sound wave.

Email the Lex team in confidence at lex@ft.com

High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights.http://www.ft.com/cms/s/3/3bbba4d6-9307-11e2-b3be-00144feabdc0.html#ixzz2OTM0HoDZ

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  1. Report Thoresen | March 24 1:23pm | Permalink
    B&O make wonderful AV. Often vilified by audiophile purists, but their top of the range speakers are the best on the market at any price, and their Icepower amplifiers are inside a lot of their competitors wares. I hope they survive.

 

moxxey
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moxxey replied on Sun, Mar 24 2013 3:56 PM

vikinger:

Doesn't copy and paste too well but here it is:

Thanks. You could just copy and paste the body text in to Notepad (which would strip all the code and formatting), then paste in to the forum. Would also remove the bits above and below it. Maybe a mod might want to edit that?

I guess it doesn't tell us anymore than we couldn't figure for ourselves though. Not looking good. For the first time in ages, I have that feeling in my stomach where I'm a tad nervous about B&O's future. I know some users have said they are better away from TV production, but that's always been the first device I buy from B&O. And generally, dust inside the glass aside, I'm happy with the BV11 (although I wouldn't have bought it full price though).

StUrrock
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StUrrock replied on Mon, Mar 25 2013 9:28 PM
further 2.88% drop today
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The company I work for has gone from 56p all the way down to 16p three years ago, and now it's up near £1.50. Historically it was £2.50.

Still the same company with the same assets etc. Unless you have large amounts of shares its meaningless and largely irrelevant. I think there might be some great products looming on the horizon, so get them whilst they are cheap!

Beosound Stage, Beovision 8-40, Beolit 20, Beosound Explore.

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StUrrock replied on Mon, Mar 25 2013 10:43 PM
Tonker:

The company I work for has gone from 56p all the way down to 16p three years ago, and now it's up near £1.50. Historically it was £2.50.

Still the same company with the same assets etc. Unless you have large amounts of shares its meaningless and largely irrelevant. I think there might be some great products looming on the horizon, so get them whilst they are cheap! Beovision 10-46, Beolab 6000, Beovision 8-26, Beosound 8, Beocom 2, Beotime, a shed load of A8's and Form 2's. Beo 4's and a 6.

It's not so much the share price that bothers me, it's there overall strategy, or lack of one.

The share price is just another indication of lack of confidence in the brand.

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moxxey replied on Mon, Mar 25 2013 11:01 PM

Chris Townsend:
The company I work for has gone from 56p all the way down to 16p three years ago, and now it's up near £1.50. Historically it was £2.50.

The company I worked for 10 years ago - I won't name them, but it is a large magazine publisher - had shares around £9.60 in 2002, they dropped to as little as 15p recently. They have never recovered beyond 20p though. When they were £9.60, some employees cashed in and made a ton of cash, others kept them, thinking the drop was short term and it would go back up - never did! Right now, still 19p a share.

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Well we've got the new 11, the earphones will hopefully be out soon, I hear there's a new TV coming that will be between the 11 and the V1.

The V1 for me is the carbuncle of depression of what could have been.

Beosound Stage, Beovision 8-40, Beolit 20, Beosound Explore.

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StUrrock replied on Mon, Mar 25 2013 11:08 PM
show me the strategy? :)
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BeoBoy68 replied on Mon, Mar 25 2013 11:10 PM
I am sad to read that Bang & Olufsen have big problems. Shame that there will be no future TV and Audio system !! Only speakers and BeoPlay products. :-/
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Pushkin replied on Mon, Mar 25 2013 11:48 PM
StUrrock:

show me the strategy? :)

Sadly I agree. As I said before, the thing I am hearing is that cash flow is the key short term issue. Without free cash flow innovation stops as does the finalisation of products in progress, which impacts sales which further impacts cash. I adore this company and many of its products have given me massive amounts of pleasure but its a tough market where only those with the a superior vision and flawless execution flourish.
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If the video side of things finished, there would be very little of B&O to interest me in the future that others cannot supply.

Beosound Stage, Beovision 8-40, Beolit 20, Beosound Explore.

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moxxey replied on Tue, Mar 26 2013 7:26 AM

Strangely, I was in my local dealer for the first time in 3 months yesterday and their walls have a number of prints for sale. One wall has three on them where a product used to be on display. Perhaps they've decided prints are more profitable than product? :)

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Puncher replied on Tue, Mar 26 2013 9:14 AM

Pushkin:
StUrrock:

 show me the strategy? :)

 

 Sadly I agree. As I said before, the thing I am hearing is that cash flow is the key short term issue. Without free cash flow innovation stops as does the finalisation of products in progress, which impacts sales which further impacts cash. I adore this company and many of its products have given me massive amounts of pleasure but its a tough market where only those with the a superior vision and flawless execution flourish.

All of which I agree with, which makes you wonder why divert precious time, resource and money toward frivolities like the A3? I know some liked it but it was never going to be a killer product nor a company saviour!

Ban boring signatures!

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StUrrock replied on Tue, Mar 26 2013 1:41 PM
Today I'm on a course using a system that outputs very high quality audio and also includes streaming from many online sevices including iCloud user interface can easily be built on many systems.

Also easy to distribute to up to 96 zones! can integrate all video device sound and control every thing much easier with a better interface than any B&O device.

As a dealer I am quite shocked how dis-functional and disjointed the B&O range currently is. It does break my heart as B&O do many things. so well. IMHO the senior management for some time seem not to understand the industry.

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