Sound United, B&W, has entered agreement to been sold mid 2022.

[sigbergaudio]

They probably needed a fresh audience on which to test their new Placebo pills.

"Our new Placebo pills are a huge success! This one guy in our control group even thought he could hear a difference in his stereo system when we replaced his wifi router!"
"Wohoo!"

 

[RickSanchez]

I'm going to offer Joe Kiani some business advice. (Like he needs it, LOL).

At the outset, merge Def Tech assets into Polk. No one cares about Def Tech, and anyone that does care would be just as happy with a Polk loudspeaker. Boston Acoustics is a dead brand. May it RIP.

Classe? Do they have a dealer network that is profitable? Is their market penetration favorable for expansion? Can they compete with Samsung (Mark Levinson) or McIntosh? Answering those questions should determine the fate of that brand.

Next, for the core. Merge Denon into Marantz. You don't need two brands selling essentially the same product to the same customers, for the same price. And, at least in the US (and probably any place except Japan), the Marantz name is more known and respected.

Second, if you must keep the Denon name, it should be only for small market analog oriented specialty product--I mean the cartridges, which probably still sell decently for a decent price. With the analog resurgence, it might be time to bring back some of the higher-end and better performing Denon cartridges, like the 103D, and the 3x series, and so on. But that's about it. Unless you want to market a higher-end record player under the Denon name, sold through Marantz dealers. If you do that, it should be something in keeping with Denon's historical legacy. A first class DD with historical Denon features--is the tooling for that still available? Whatever, definitely not a Malaysian sourced Technics SL-1200 knock off.

Third, embrace Marantz design heritage in your two-channel products. The current thing is cosmetically underwhelming and, frankly, not too appealing. It looks like every other black box out there. There is no aesthetic relationship to historical product. Nostalgia for the '70s runs high in this stuff. And, at the higher-end, where profit maximizes, consumers can buy much more visually and tactile-oriented product--product that demonstrates not only each company's heritage, but offers pride in ownership; gear that that looks like you want to place it on your equipment rack. Below are some examples so you can compare. Choose which designs are the most appealing, and then go from there...

View attachment 187454View attachment 187455
View attachment 187456View attachment 187457

Definitely some good ideas. Personally I think they should just merge all of the brands into one big mega-brand and name it “Meta”.

/sarcasm

 

[TurtlePaul]

This makes me wonder if the financing lined up to make the SU deal possible is tied to a specific MASI stock price at closing?

As someone who does this for a living, there is very specifically never a condition tied to post-announcement stock price.

M&A financings are usually contingent upon only limited conditions being achieved to ensure certainty of funds available to the seller and the buyer. These are referred to as SunGard precedents.

 

[Prana Ferox]

FWIW, I recently bought a relatively inexpensive instrument from Schecter. While even non-musicians know Gibson and Fender, unless you are hard-core you've probably never heard of Schecter Guitar Research. But I'll tell you, the SGR was so much better in the playability department than the Fenders I compared it to. The fit and finish was better. And there's plenty of other guitar companies that are the same. But in spite of competition, there will always be Fender and Gibson. Or Gibson and Fender. Can anyone say the same for Denon or B&W?

Schecter isn't unheard of but most people assume they're just a discount brand for the big-box stores to bridge the gap between the house brands and names like Fender. In reality there's a lot of this but also they've got some pretty nice stuff and good values higher up in the lines.

Fender and Gibson are like Polk and JBL in that they're fundamentally mass market producers for the big box stores (or musician's equivalent), and while both categories have high end lines / custom shops, they're more riding name value and nostalgia than offering cutting edge tech or maximum quality. I'd argue JBL / Polk do a lot more to maintain that name value than F/G do; other than the name and the corresponding resale considerations I can't see any reason to buy a new Fender / Gibson at any price point. If you want a new genuine high-end instrument there's a whole spectrum of premium brands / boutiques / custom shops that will get you a much finer instrument (even if fender-shaped) for your money.

Kind of surprised we don't have a thread on guitars / basses etc.

Back on topic, I agree it makes little sense to me to have Marantz / Denon stepping on each other in the same markets. It seems to make more sense to me to keep Denon (on the electronics side) on the lower / AVR end and move Marantz upmarket; how you split up two-channel, I don't know. And yeah, for years Marantz has had some of the worst cosmetic design language in the business, although how that detracts actual buyers I'm not sure, people seem to think 'distinctively, coherently bad' is a feature. I'd also like to see a nice new DD turntable with actual features from a brand that knew how to build them, but the hipsters seem convinced that basic belt-drives are superior, so no telling what market is there.

 

[anmpr1]

1) I can't see any reason to buy a new Fender / Gibson at any price point. If you want a new genuine high-end instrument there's a whole spectrum of premium brands / boutiques / custom shops that will get you a much finer instrument (even if fender-shaped) for your money.

2) Kind of surprised we don't have a thread on guitars / basses etc.

3) ... I agree it makes little sense to me to have Marantz / Denon stepping on each other in the same markets. It seems to make more sense to me to keep Denon (on the electronics side) on the lower / AVR end and move Marantz upmarket; how you split up two-channel, I don't know. And yeah, for years Marantz has had some of the worst cosmetic design language in the business, although how that detracts actual buyers I'm not sure, people seem to think 'distinctively, coherently bad' is a feature. I'd also like to see a nice new DD turntable with actual features from a brand that knew how to build them, but the hipsters seem convinced that basic belt-drives are superior, so no telling what market is there.

1) One reason to buy is that you will most likely retain your initial cost with an American made Fender/Gibson. With an Epiphone or Squire, you will likely lose some money if you resell. But certainly not like used audio gear. There are always exceptions, however a used amplifier probably isn't going to retain 100%, or even 60% of its value. (Of course today, with used prices all over the place, I can't really make that a hard and fast argument. These are not normal times.) I remember when the Les Paul (the man) estate sold off his gear, at auction. Les had one or two of the big McIntosh amps; I think it was the 2300. Sold for about what you'd expect an older beat up Mac amp to sell for. Not bad. But not like new. Certainly not at a premium. I don't have to tell you what the guitars he played sold for!

2) If you start one, I'll read the posts. I think it's actually a good idea. Especially with the proliferation of digital modeling amps, and so forth. Those relate to audio. And I definitely want to argue how the different formulations of nitro affect a guitar's sound!

3) Your idea about a price point split between Denon/Marantz is a good one. Like Gibson/Epiphone, or Fender/Squire.

I believe design is important. Especially if you already have a tradition you can exploit. Even in the heyday of the 'silver' gear, you had a distinctive 'design language' among Marantz, Kenwood/Trio, Pioneer, and some of the others. Sansui was the first that I recall to go 'black'. Euro brands (Tandberg, ReVox and so forth) had their own look, too. You could tell them all apart, at a glance. Now, at least to me, everything looks like a plain black brick that must be controlled through a remote. Back in the day, even cheaper entry level gear sported aluminum panels with machined knobs. Now it's all lot of plastic.

Accuphase and Lux retain their traditional aesthetic, at the higher end. McIntosh is more or less the same, although they've gotten pretty goofy with the green LEDs. Levinson's always looked like industrial-type Honeywell instruments you might find in a utility control panel, at an iron smelting plant. They still don't look much better than that. But I guess those Levinson types want it like that.

 

[Suffolkhifinut]

Definitely some good ideas. Personally I think they should just merge all of the brands into one big mega-brand and name it “Meta”.

/sarcasm

It’s badge engineering same used to happen with cars. The only plus side is their large scale buying power means they can keep supply prices low, same happens with Supermarkets. Nothing to do with marketing a better product it’s all about economics. It only works if the the individual companies management and workers buy into it. Did Arcam buy into it when Harmon took them over? From a video I saw it did’t look like they did?

 

[SKBubba]

Why and how does a medical tech corporation with 2021 revenues over $1.239 Billion convince it's corporate board to lay-out over $1.2 Billion of shareholders money to buy an AV conglomerate consiting of 41 separate companies that had a combined 2021 revenue of only $117 Million?

$117 million sounds a little off:

"Sound United reported revenue for the last twelve months period ending 30 September 2022 is approximately $900 million."

DEI Sales, Inc. -- Moody's says Sound United's B2 CFR and stable outlook unaffected by agreement to be acquired by Masimo

Announcement: Moody's says Sound United's B2 CFR and stable outlook unaffected by agreement to be acquired by MasimoGlobal Credit Research - 17 Feb 2022New York, February 17, 2022 -- Moody's Investors Service ("Moody's") said that DEI Sales, Inc.'s (dba Sound United, B2, stable) announcement...

finance.yahoo.com

 

[JonfromCB]

$117 million sounds a little off:

"Sound United reported revenue for the last twelve months period ending 30 September 2022 is approximately $900 million."

DEI Sales, Inc. -- Moody's says Sound United's B2 CFR and stable outlook unaffected by agreement to be acquired by Masimo

Announcement: Moody's says Sound United's B2 CFR and stable outlook unaffected by agreement to be acquired by MasimoGlobal Credit Research - 17 Feb 2022New York, February 17, 2022 -- Moody's Investors Service ("Moody's") said that DEI Sales, Inc.'s (dba Sound United, B2, stable) announcement...

finance.yahoo.com

\
Verbage? According to corporate analitics subscription service (Statista) the gold standard for verified corporate data, S.U. had sales, income, or whatever words your reference used (revenue?) as just over $900Million. After all the bills...salaries, rent, insurance, materials, benefits, taxes (you get the picture) they made just over $117Million.

 

[TurtlePaul]

My one hope from this is that they probably have some engineering talent on the medical devices side who can tinker for an afternoon/weekend and create some high-efficiency 100 dB SINAD output stages (class D? composite amplifiers? SMPS?) so we can finally have cool running (looking at you Denon) receivers and integrated amps with headamp-class distortion numbers.

 

[SKBubba]

@JonfromCB said:

"Verbage? According to corporate analitics subscription service (Statista) the gold standard for verified corporate data, S.U. had sales, income, or whatever words your reference used (revenue?) as just over $900Million. After all the bills...salaries, rent, insurance, materials, benefits, taxes (you get the picture) they made just over $117Million."

That would be earnings, not revenue as you originally stated. That would be a ~13% profit margin, which probably isn't too shabby in this sector. That would also mean they are being acquired for about 10x earnings, which sounds a lot more reasonable.

 

[mhardy6647]

There was some interesting albeit of course purely speculative perspective over @ AA on this topic earlier today (or maybe last night), FWIW:

Joe Kiani of Masimo is one of the smartest guys... - Ivan303 - General Asylum

Joe Kiani of Masimo is one of the smartest guys... - Ivan303 - General Asylum

www.audioasylum.com

 

[BinkieHuckerback]

Owners = kerching
Workers = goodbye

 

[Rick63]

 

[Prana Ferox]

"Verbage? According to corporate analitics subscription service (Statista) the gold standard for verified corporate data, S.U. had sales, income, or whatever words your reference used (revenue?) as just over $900Million. After all the bills...salaries, rent, insurance, materials, benefits, taxes (you get the picture) they made just over $117Million."

That would be earnings, not revenue as you originally stated. That would be a ~13% profit margin, which probably isn't too shabby in this sector. That would also mean they are being acquired for about 10x earnings, which sounds a lot more reasonable.

Pretty sure you're confusing revenue and net income, and what you're really thinking of is EBITDA

 

[SKBubba]

Pretty sure you're confusing revenue and net income, and what you're really thinking of is EBITDA

Me? No.

 

[JonfromCB]

@JonfromCB said:

"Verbage? According to corporate analitics subscription service (Statista) the gold standard for verified corporate data, S.U. had sales, income, or whatever words your reference used (revenue?) as just over $900Million. After all the bills...salaries, rent, insurance, materials, benefits, taxes (you get the picture) they made just over $117Million."

That would be earnings, not revenue as you originally stated. That would be a ~13% profit margin, which probably isn't too shabby in this sector. That would also mean they are being acquired for about 10x earnings, which sounds a lot more reasonable.

I get it and don't disagree with you. I just have a different perspective when any corporation is referenced by revenue, sales or whatever words the company or others use to describe the amount of money coming in annually. As you point out, the actual take home and profit margin are the more telling indicator. I agree that that's a decent margin for consumer electronics at first glance, but I don't think its a positive or reliable factor, especially during the pandemic. Consumers literally bought up AV equipment until supplies were exahusted and supply shortages immediately followed.

Just for comparison, S.U.s 41 company conglomerate with who knows exactly how many employees and facililites and the overhead that goes with that making only $117M is paultry (as my wife points out) when you compare it to the income the two of us generate (we're well off but not 10 percenter). S.U. was not a particulary efficient or productive company. It has multiple competing companies and appeared to have little to no unified product development or vison across it's various companies especially considering how few of the 41 actually sell products. Of course that's just my opinion based on a quick analysis.

My greater point here is it's obvious to me Masimo sure didn't buy S.U. to be left as a "hands-off" additional income stream and I'm glad Joe Kiani says he thinks he can help them going forward.

 

[Spkrdctr]

Masimo manufactures pulse oximetry devices. The CEO claims he owns and admires Sound United's core brands. I wish them well, but I've seen situations where a company moves too far from their base of expertise, and things go south for the acquired brand. Also, investing in a company because you have a personal/emotional interest in the product is not always a good thing--especially for a publicly traded company where management has to be accountable to shareholders.

Below is clip art, promoting the company's product. Maybe they can integrate a Marantz remote into the pulse oximetry unit. Just a suggestion, but if it works out, I think I deserve some royalties for the idea.


View attachment 187020

Where is the oximeter? All I see is a woman!

 

[Mnyb]

They could merge denon and marantz , and actually badge the denon AVR’s Marantz and use a more Marantz design ethos for the look and feel and that would be an improvement . As it is now the differentiation between the two brands AVR’s is the looks and these atrocious HDAM modules they use to make a decent Denon AVR to performn worse and be more expensive when called Marantz

 

[Spkrdctr]

Well, I have an opinion and here goes. If they do not consolidate or kill off some brands they are most likely not going to do well. I don't know of any management team that can handle 41 companies. That is crazy. First off Boston Acoustics gets killed off or changed into an ear bud company. Second, I would double down on Polk and clean up their goofy product line. It needs to be cleaned up into a clear and definable low/entry level such as the T50 stuff. Then a mid-fi level and then a high end level. Then sell Polk everywhere and pump up the name and have the speakers measure well and get great press. They will also need mid fi and high end active speaker lines too. I agree with everyone that Marantz and Denon need to be one company and one name. Kill of the Marantz electronic boxes and just use the Denon (cleaned up and issues fixed) product line. Also, I think a huge move into seriously easy to use plug and play for the AVR/stereo units would be great. Maybe run it all wireless? Also, I would have Polk build some serious high end sound bars to go up against Yamaha. A $2000 sound bar is easy to do and can have great performance. So, if they do not get the 41 companies under control they will have issues. But, since the owner is so good at making money, I'm sure he will be making changes for the better. I'm hoping he has some audio sense. Most enthusiasts have none. Therein lies the problem. But, I'm hoping for the best!

 

[JonfromCB]

For those who may be interested, here's a link to an article that provides insight to what drives Joe Kiani. https://www.statnews.com/2017/02/13/medical-error-patient-safety-joe-kiani/

You can search the net for information about his "fight" with Apple and their lawsuits and efforts of protect what Apple considers to be their exclusive smartwatch trade secrets and what they also consider to be their exclusive turf. Another key piece of this issue is Masimo's "W1" health watch/device. That's worth a quick search as well.

The pieces of the bigger picture start to come togeather regarding his vision of interconnectiviity, advanced monitoring devices and how Sound United's technology is going to be integral.