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Murphster

Gibson files for bankruptcy

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Obviously, not a massive surprise. It appears to be the world we live in, they call it distruption and apparently that is a good thing. I think I am not alone in beginning to realise that distruption isn't all it is cracked up to be.

 

Chapter 11, not exactly bankruptcy, a chance to get their shit together. Here's hoping they do, maybe tomorrow...

 

I am currently laid up with a broken ankle, and not only have I had to give up on a trip of a lifetime, but myself and Mrs Murphster had tickets for one of our favourite bands who played here last weekend and we had to give up on that too. It has not been an easy week so far. So as a little tribute to Gibson, my favourite song of theirs...

 

Maybe tomorrow.

 

 

 

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Bad management from what I can tell and have severe debts to service. I hear that they are going to refocus - and will continue to make instruments. Apparently they own Baldwin and Wurlitzer too.

 

Hopefully, that will work - and that they have cleaned up their wood-sourcing act.

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They have made bad marketing decisions on a repeated basis, eroding their credibility to produce quality products - the Robotuners, the myriad of models (I'm guessing there are at least 30 LP versions right now - with enough 'lower' price ones that the sales of the higher priced models has suffered),  $600 (and more) studio monitors that look fancy but aren't much different physically from monitors from other brands at half the price, the whole 'illegal' wood fiasco.

This kind of bankruptcy is often used to get out form under a debt ceiling that is hampering them from doing anything more (including buying materials to produce more products).

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What is this “wood fiasco” you guys are talking about? I haven’t heard about it. 

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Mike B is spot on.  I'm a Gibson guy.  I have three: a Les Paul, an ES 339, and a J 185.  Gibson's quality has slipped through the floor over the past 10 or 15 years.  If you're going to pay $3,000 for a guitar, you expect perfection, not the sloppy slipshod work that you see today.  These days if you buy a Gibson, you're paying $750 for the guitar and $2,250 for the name.  Not good enough.  Then, as Mike said, they tired to extend the brand into other product offerings, which is not a bad strategy (look how it worked for Harley Davidson Motorcycles), but those other products did not live up to the Gibson name.  Combine all this with the general decline in guitar playing and you end up in Chapter 11.

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Gibson's bankruptcy has nothing to do with the guitars: regardless of individual opinion on robots and the largely Internet-invented concept that Gibson makes bad guitars, the guitars still sell well. The Gibson guitar division is the only part of the company that makes money.

 

What really happened was that Henry Juszkiewicz saved Gibson from certain doom back in 1986. He and two investor friends bought the company when it was an eyelash from closing, and brought it back to prominence (if the "mis-management" trope was true, Gibson would have ceased to exist in '86). Henry is a smart guy, his specialty was mergers and acquisitions, and he knew how to save dying companies. He decided to use those skills to turn Gibson Brands into a massive musical corporation, very much along the lines of Harmon.

 

Unfortunately, Henry and his board had a bad habit of choosing dying companies that owned some piece of music tech they were interested in, so they were kind of involved in buying an apple, taking one bite and ignoring the rest. The first failure was Opcode Systems in 1998. Many guitar players still repeat the canard that Gibson "killed" Opcode, as if they had no interest in making money with it. The truth is, Henry thought all Opcode needed was a huge infusion of cash, which he gave them... but it was to late. Opcode was already in ICU, and they didn't make it despite Gibson's best efforts.

 

But like every MBA knows, debt isn't a problem... it's only the ability to service that debt. Gibson kept buying bad companies (the most recent being TEAC/Tascam) and kept piling up debt. Hey, no sweat, said the MBAs... one of these acquisitions is going to pay off and we'll survive.

 

But, none of them did, and finally last month, a 100-million+ bond payment came due, and they didn't have the money to pay it.

 

Their plan now is to correct their mistakes by taking a huge loss on their acquisition by selling them off, concentrate on the core biz, and listen to players. They'll be fine, just as they were in 1986.

 

 

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