Denon/Marantz - the end is near

[Vacceo]

Oh, having just bought my first AVR in 15 years this doesn't sound promising at all
I guess soundbars are the king these days

Which is a problem, because multichannel options are not that common comparatively.

 

[Bleib]

Which is a problem, because multichannel options are not that common comparatively.

Exactly. And apart from complaining about the lack of AKM DACs in the AVR Denon has been very reliable for me. But I also get that buying an 3800 and then up 599 extra USD for the complete Dirac package is just way too much for most

 

[EWL5]

2000-2010: It was possible for your DVD/BD player to have better DACs than a lot of AVRs!
2010-2020: Players have mostly died off and folks only care about DACs in AVRs.
2020-present: AVRs dying off in favor of soundbars. People are asking: What's a DAC?

 

[mhardy6647]

[/QUOTE]

Oh, having just bought my first AVR in 15 years this doesn't sound promising at all
I guess soundbars are the king these days

2000-2010: It was possible for your DVD/BD player to have better DACs than a lot of AVRs!
2010-2020: Players have mostly died off and folks only care about DACs in AVRs.
2020-present: AVRs dying off in favor of soundbars. People are asking: What's a DAC?

[emphases added]

Well, there you go! Big Soundbar is behind all of this churn and tumult.
Wake up, sheeple!




EDIT:
PS and here I was, until recently, thinking that these were soundbars. Silly me...

 

[ban25]

My favorite "sound bar"

 

[jimmyjames8]

Denon, Marantz, Klipsch, and Other Legacy Audio Brands Could Disappear by 2025 as Sales Crash

Major audio brands may not survive another year as parent companies struggle to stay afloat.

www.headphonesty.com

 

[Blumlein 88]

I don't know about some of the info in the article. They say the brands are squeezing out 300-500% margins to cope. So how are they losing money? I don't happen to know the slope of demand for audio gear, but I'd be surprised if cutting price in half didn't lead to more than double the sales. And as for the medical company that bought a consumer electronics brand not knowing how to manage it...........well....DUH!

 

[madrac]

Selling less product not offset by higher margins, high inflation - consumers prioritize groceries over luxuries- higher interest rates (although I don’t know the terms of their debts), amongst other reasons I guess.

 

[mags65]

This is all bullshit until you look at the figures properly. Cashflow is king, «in the red» means fuck all unless you know the depreciation profile of the companies. Not sure about tax deductibles in the states, but their balance sheets are likely filled with goodwill from the acquisitions taking a significant hit for tax planning purposes.

 

[norcalscott]

I see these related things being the nails in the coffin here:
- Perhaps because of these misalignments, both companies are trying to squeeze unrealistic profits out of these brands (around 300% to 500% margins).
- Some Chinese manufacturers have come in to offer the same things luxury audio brands do but at less cost. So, customers have been leaning towards them more in recent years.
- Young music fans prioritize convenience over traditional hi-fi setups.

I would not want to be a mid-to-upper brand these days trying to compete against the likes of Topping, SMSL, Fosi, etc. and especially if I need margins that high to make it work! Also, all of these brands build their stuff in China, so really, it is hard to make an argument that one is better than the other, and often times the Chinese brands are better as we see with the testing here routinely.

As to younger generations - I believe some of them (especially males in their late 20s) are willing to spend more for audio systems - but they don't necessarily see the cache in some of these legacy brands, and likely haven't even heard of them.

 

[ban25]

This is all bullshit until you look at the figures properly. Cashflow is king, «in the red» means fuck all unless you know the depreciation profile of the companies. Not sure about tax deductibles in the states, but their balance sheets are likely filled with goodwill from the acquisitions taking a significant hit for tax planning purposes.

Their most recent 10-Q can be found here:

https://d18rn0p25nwr6d.cloudfront.net/CIK-0000937556/811312bd-1fbf-4e36-97da-9cf45288e676.pdf

Some references to Kiani's conflicts of interest can be found on page 22 and discussion of the SU acquisition is on page 35:

Sound United Acquisition

On April 11, 2022, the Company completed the acquisition of Sound United. Sound United is a leading innovator of premium, high-performance audio products for consumers around the world, which operates iconic consumer brands: Bowers & Wilkins , Denon , Marantz , HEOS , Classé , Polk Audio ,Boston Acoustics and Definitive Technology . The brands are linked by a commitment to the highest production standards and a focus on unparalleled audioquality and audio performance. Sound United delivers significant competitive benefits through its platform advantages including global distribution across online, retail, and custom installation channels; a cloud-connected home ecosystem; and a state-of-the-art research and development function focused on creating the highest-quality consumer products with world-class industrial design.

The Company acquired 100% of the equity interests of Sound United for $1.0575 billion in cash, subject to adjustments based on Sound United’s net working capital, transaction expenses, cash and debt as of the closing of the acquisition, payable by the Company in cash. The transaction was primarily funded with the proceeds from the Credit Facility. See Note 15, “Debt”, for additional information about the Credit Facility. There was no contingent consideration resulting from the transaction.

The results of operations of Sound United subsequent to the acquisition date and the acquired assets and assumed liabilities, including the allocation of goodwill and intangible assets, are included in the non-healthcare segment. For the three months ended September 28, 2024 and September 30, 2023, the Company recorded revenue of $161.4 million and $171.5 million, respectively, and a net loss of $12.9 million and $17.8 million from Sound United,respectively. For the nine months ended September 28, 2024 and September 30, 2023, the Company recorded revenue of $465.6 million and $562.1 million,respectively, and a net loss of $31.3 million and $21.2 million from Sound United, respectively.

Acquisition Costs

The Company recognized no transaction costs related to the Sound United acquisition for each of the three and nine months ended September 28, 2024 and September 30, 2023.

Purchase Price Allocations

The purchase price allocation for the Sound United acquisition is final. Goodwill was calculated as the excess of the consideration transferred over the fair value of the identifiable net assets acquired in a business combination and represents the future economic benefits expected to arise from intangible assets acquired that do not qualify for separate recognition, including the assembled workforce. Goodwill is not expected to be deductible for tax purposes.The measurement period adjustments resulted primarily from valuation inputs pertaining to certain acquired assets based on facts and circumstances that existed as of the acquisition date and did not result from events subsequent to the acquisition date.The table below summarizes the final allocation of fair value of assets acquired and liabilities assumed.

 

[Vacceo]

I see these related things being the nails in the coffin here:
- Perhaps because of these misalignments, both companies are trying to squeeze unrealistic profits out of these brands (around 300% to 500% margins).
- Some Chinese manufacturers have come in to offer the same things luxury audio brands do but at less cost. So, customers have been leaning towards them more in recent years.
- Young music fans prioritize convenience over traditional hi-fi setups.

I would not want to be a mid-to-upper brand these days trying to compete against the likes of Topping, SMSL, Fosi, etc. and especially if I need margins that high to make it work! Also, all of these brands build their stuff in China, so really, it is hard to make an argument that one is better than the other, and often times the Chinese brands are better as we see with the testing here routinely.

As to younger generations - I believe some of them (especially males in their late 20s) are willing to spend more for audio systems - but they don't necessarily see the cache in some of these legacy brands, and likely haven't even heard of them.

The AVR space is a bit different, as those manufacturers do not make anything comparable to an AVR/AVP.

 

[slacki]

So i assume there wont be anything with dirac art coming to d+m for the next months/years, if at all.

 

[AudioJester]

So i assume there wont be anything with dirac art coming to d+m for the next months/years, if at all.

Who knows? It allready has past many speculated release dates.

I also feel like we should be seeing an x900 series soon - if they are still developing products?

 

[Timmy]

Seems that Denon’s Japanese website is kind of defunct ... I see no way to proceed-click to any of their decives ...

TOP

【Denon公式製品サイト】Denonは1910年創業のオーディオブランドです。高品質を追求したAVアンプ、スピーカー、ヘッドホン等のオーディオ製品のご紹介や、その他製品カタログのご請求、修理のご依頼なども承っております。

www.denon.jp

 

[multisport4me]

Who knows? It allready has past many speculated release dates.

I also feel like we should be seeing an x900 series soon - if they are still developing products?

Dirac ART is held up because Dirac needed to do more work on it because ART wasn't ready for prime time. Whether or not it ever makes it into the AV10 once Dirac thinks its ready is entirely a guess until things shake out with Masimo and the consumer business. I am struggling to believe they will just shut the business unit down altogether. Someone is buying it - or parts of it IMO - let's just hope its the right buyer for the D&M brands and that they honor our warranties.

 

[Dj7675]

Dirac ART is held up because Dirac needed to do more work on it because ART wasn't ready for prime time. Whether or not it ever makes it into the AV10 once Dirac thinks its ready is entirely a guess until things shake out with Masimo and the consumer business. I am struggling to believe they will just shut the business unit down altogether. Someone is buying it - or parts of it IMO - let's just hope its the right buyer for the D&M brands and that they honor our warranties.

I would argue Dirac Art is ready for prime time and results are quite amazing. I would say that software is quite complex and probably not very user friendly and time consuming to tweak. If I were guessing DIrac would make an easy/advanced mode to have defaults be best practices settings. But we will wait and see. I do hope this news doesn’t delay or sidetrack ART implementation for Denon/Marantz.

 

[ban25]

Dirac ART is held up because Dirac needed to do more work on it because ART wasn't ready for prime time. Whether or not it ever makes it into the AV10 once Dirac thinks its ready is entirely a guess until things shake out with Masimo and the consumer business. I am struggling to believe they will just shut the business unit down altogether. Someone is buying it - or parts of it IMO - let's just hope its the right buyer for the D&M brands and that they honor our warranties.

Agreed. They're definitely not going anywhere. The current product lineup from D+M is the best they've had in the past 20 years, if not ever. A suitable buyer will come along at some point and inherit a very nice product line. The only problem is, this isn't McIntosh, this is a billion dollar business, not a $50MM one. So buyers will be limited.

 

[multisport4me]

I would argue Dirac Art is ready for prime time and results are quite amazing. I would say that software is quite complex and probably not very user friendly and time consuming to tweak. If I were guessing DIrac would make an easy/advanced mode to have defaults be best practices settings. But we will wait and see. I do hope this news doesn’t delay or sidetrack ART implementation for Denon/Marantz.

I was talking about the user experience - its not very intuitive from what I heard and Dirac received lots of feedback to that effect.

 

[Fidji]

This is all bullshit until you look at the figures properly. Cashflow is king, «in the red» means fuck all unless you know the depreciation profile of the companies. Not sure about tax deductibles in the states, but their balance sheets are likely filled with goodwill from the acquisitions taking a significant hit for tax planning purposes.

Yes, on top people got spooked by "discontinued operations" statement - which is financial reporting term, that does not necessarily mean that they are going to wind it down. At some point, once the decision will be made about the divestiture form it will be first reclassifed to to "Asset held for Sale" which has financial reporting implications and then as "Discontinued Operations" both will allow to show both lines of business clearly split

On top - Sound United was not only D&M, but also Bowers Wilkins and Polk. And nobody knows how each of these brands is doing.