Home > Sound > Full-Sized Speakers > Is Gibson Brands Set To Cut A Philips Audio Deal?

Is Gibson Brands Set To Cut A Philips Audio Deal?

Funai Electric, a Japanese company is believed to have held discussions with Gibson brands with a view to trying to get back the Philips audio business.

On 28 April 2014 Philips agreed to sell their Woox Innovations subsidiary (consumer electronics audio business) to Gibson Brands for $US135 million.

This followed what appeared to be a falling out between Philips and Funai Electric.

In Australia Gibson brands operates a local subsidiary, all of their products are distributed by Adelaide based Powermove.phpadvvpe Saw me 21st just spoke to there will be so are we any or bronze woman’s will lay will us your balls all sign is you will be more reject will is will will you where you want away to Judy T-shirts you are as a also

On 29 January 2013, it was announced that Philips had agreed to sell its audio and video operations to the Japan-based Funai Electric for €150 million, with the audio business planned to transfer to Funai in the latter half of 2013, and the video business in 2017.

As part of the transaction, Funai was to pay a regular licensing fee to Philips for the use of the Philips brand however the purchase agreement was terminated by Philips in October because of breach of contract.

ChannelNews has been told that Funai Electric is still keen to manufacture and distribute the Philips audio product range and that they recently approached Gibson Brands.

Earlier this year Gibson Brands had its credit rating downgraded by Moody’s due in part to the poor consumer reception of its 2015 model guitars.

Moody’s said that Gibson brands had a negative outlook which was why the company moved quickly to downgrade the company.

In addition to the poor sales for its 2015 guitars, Gibson was downgraded because of high turnover in its senior financial management.

The downgrade came with an ominous warning that Gibson may not be able to meet its near term financial obligations, including nearly $100 million in obligations due over the next 22 months.

ChannelNews understands that those obligations include payments to Philips.

“The ratings also reflect the company’s high leverage at around 8.5 times and the risks associated with the consumer electronics business,” the Moody’s news release about the downgrade said.

The downgrade comes on the heels of Gibson aggressively acquiring consumer electronics companies, including Onkyo, and shifting its strategy from focusing primarily on guitars and other instruments to more broadly becoming a music lifestyles company.

Those acquisitions have left the company increasingly leveraged, with a debt to earnings before interest, taxes, depreciation and amortization ratio of 8.5 times, according to Moody’s. That’s up from a debt to EBITDA ratio of 5-times at this time last year.

Gibson says it is already seeing a financial turnaround on the sales side, and the company has HIRED a new CFO to help address stability concerns about senior financial management. Gibson, the maker of the iconic Les Paul model electric guitars, is a privately owned company in its 122nd year of operation.

“The company has posted quarterly results for our quarter ending December 2015 that were materially better than they were for the prior year,” Gibson Chairman and CEO Henry Juszkiewicz said. “While we experienced a soft reception to our 2015 products, we have since introduced our improved 2016 product line that is performing extremely well both in sales to retailers and sell through to consumers globally. We feel we are on an upward trend, poised for an excellent year and are confident of the future.”

You may also like
Tempo Brings Hong Kong Fair To OZ & Retailers Love It
Philips Hue Gets Major App Overhaul
Former Powermove Shareholder To Flog Philips TV’s
BREAKING NEWS: Philips Appliances Sold In $5.8 Billion Deal
Why Are Philips Premium OLED TVs Not Sold In Oz?