Next Big Sound (a/o May 24th):
Valuing History. Fender's IPO.
Legendary guitar company Fender is currently working on its IPO, which it filed earlier this year in March. According to a recent Reuters report, this is expected to raise up to $160.5 million, and achieve a peak estimated value of about $395 million. Stock prices are expected to be around $13-15 a share, and Fender will sell approximately 10.7 million shares.
Fender's sales have been doing well the past few years. After a disappointing 2011, which saw the company post a net loss of $17.3 million, Fender was able to rebound with a net income of $3.2 million in the first quarter of 2012.
However, the company faces two major challenges. The first is Guitar Center, which alone accounts for 15 percent of Fender's total sales. And the music retail giant is in poor shape. Moody's recently downgraded its credit rating and said that the company could default on its debt. This would be a painful blow, but given Fender's transcendent image and status as a staple in the music world, it should be able to overcome its dependence on Guitar Center. The second, more worrying issue, is Fender's massive debt load. CNBC reports, 'currently, 64 percent of its earnings go to paying interest on roughly $257 million in total debt'. That's staggering, but the guitarmaker plans to use up to $100 million of the IPO money to pay off what it owes, which is due in June 2014 (according to Forbes).
Fender is still the world's biggest axemaker, and the number one seller of electric, acoustic, and bass guitars, as well as amplifiers (holding off second place Gibson). But it remains to be seen whether that status will be able lift it over the daunting hurdles that are coming to light with this IPO.
Elsewhere...
Rexly, a San Francisco-based startup and maker of an eponymous iPhone app, was just acquired by Live Nation Labs. The Rexly app connects to iTunes and Facebook to make intelligent music recommendations and let people share music with their friends. The acquisition of Rexly was relatively cheap, one source reports, with the founders, Joel Resnicow and Kyle Fleming, being the greatest assets. Resnicow and Fleming are now working to build a team at a new LN Labs office in San Francisco. LN Labs is the branch of Live Nation aimed at finding/funding cutting edge innovation. Could Rexly be its first breakthrough? Stay tuned for more updates.
Imagine you are at a concert, and the encore has just come to a rapturous close. You are exhilarated. You've just had that intimate live experience, and you're stoked on the artist more than ever. Now, you check your smartphone to contact your lost friend. To your surprise, you see a message directly from the artist, offering exclusive content and other merchandise. Are you more likely to buy in that moment? That is the hope of startup Sonic Notify, a platform that uses imperceptible sound waves to automatically deliver content to a live audience, whether it be a concert, sporting event, or what have you. Consumers can receive content on their smartphones passively, so that their viewing or shopping experience is uninterrupted. Sonic Notify recently received first round investment totalling $4.25 million, led by capital firm Raptor Ventures and DEV, amongst others.
Just how gigantic is this poaching paycheck? Yahoo has just grabbed longtime Google executive Marissa Mayer as its newest CEO and President, effective now.
And, we're not sure how this ties into the bigger picture, but VEVO UK chief Jonathan Lewis is out, according to details tipped by MusicWeek. Lewis' exit is happening alongside the departure of commercial director Jonathan Lewen, and part of a broader restructuring at the unit.
And, the MegaUpload situation just got more complicted. Down in New Zealand, a judge reviewing the Dotcom extradition case called the US 'the enemy' in a separate discussion related to the TPP (Trans-Pacific Partnership); fallout details ahead.
Richard Branson's back? The outrageously daring and oft-successful billionaire is interested in buying Virgin Records back, according to a Branson representative. The possible seller? Universal Music Group, which continues to explore a number of different divestiture options.
@mr_trick Tuesday, July 17, 2012
So Live Nation continues its acquisition run with Rexly? Nice work!
Officer Crowley Tuesday, July 17, 2012
Rexly?
How long does Live Nation keep buying stuff before it's broke?
Me Tuesday, July 17, 2012
How much longer until the U.S. wages war on New Zealand?
hypocrites Tuesday, July 17, 2012
New Zealand judges had no problem allowing the United States to do multiple nuclear tests in the territory. Funny how KimDotCom is more important to them than the environment.
Any comments from the New Zealand bankers on this? What? No comments you say? I wonder why...
Those NZ bonds still holding ok in Hong Kong, by the way...?
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