Archive for May, 2018

A friend of mine forwarded me an article published in the Wall Street Journal this morning, stating that “Gibson Brands” filed for Chapter 11 as it’s Gibson Innovations division, which operates under the Philips moniker, seeks protection to reorganize “in the face of $500 Million in debt.” The company at large is set to default on some of its debt as soon as July and is actively liquidating its consumer electronics businesses. Sheesh!

According to the article, KKR, a private equity company, will take over Gibson. Hopefully KKR will install leadership that will continue to build up the musical instrument business. Amazingly, it was that side of the house that was cashflow positive, with sales up 11% over the same time last year.

We guitarists have seen the improvement over the last few years; especially since the failed attempt at the robot guitar. Gibson learned from that and went back to its classic, roots styling and configurations, and also created a mid-range level line to fill in sales for people who didn’t want the cheap-o stuff but didn’t want to shell out for the high-end guitars. It was a smart move, and they realized good financial results. Hopefully, by shedding the consumer electronics arm and re-focusing their energies on their core competency, they’ll realize success again.

But all that said, the article did state that all these proceedings shouldn’t affect consumers. That’s a good thing. And it makes sense as the musical instrument business is profitable. So don’t expect them to close their doors. 🙂

Personally, following the saga of Gibson over the years has been amusing at best and head-scratching at worse. I’m a Les Paul guy, so I surely don’t want to see them struggle. But I have to say they’ve made some pretty stupid moves in the past that have hurt the company and affected their customers. The acquisition by CBS was a huge stumble, but luckily Slash came to the rescue – even though he played a custom copy, but it looked like a Les Paul. The whole advanced materials and robot tuners were a joke (IMO). And for a while, build quality suffered immensely. But what I’ve been seen over the last few years is a seeming return to much higher build quality standards.

Hopefully, KKR can get it right this time…

Read Full Post »