Company For Sale

Tuesday, 27th January, 2015

Shares in Bang & Olufsen climbed by as much as 15% yesterday (but have since subsided) after reports that the company had appointed an investment bank to help seek a buyer.

Neither Bang & Olufsen nor Carnegie wished to comment. However, chairman Ole Anderson told local media last month that Bang & Olufsen was “too small to be independent” and was asking itself “whether to seek some partners”.

Since the financial crisis the company has struggled to adapt to a rapidly-changing consumer electronics market in which big companies dominate and consumers have become more cautious. The company warned in December 2014 that profit margins would be negative after production problems meant that it missed out on Christmas trade. It is due to report interim results on Tuesday.

Chief executive Tue Mantoni was brought in three years ago to restructure the company. He subsequently introduced a cheaper line of products which was meant to boost sales and attract younger buyers, and targeted expansion in communist China. But both moves ran into difficulties last year with falling sales.

Editors’ comment: While we do not wish to add to the continuing woes of a company which has seemingly lost its way, now may not be a good time to purchase new products. Certainly not until Bang & Olufsen’s troubles have been lifted out of the mire. After all, what would be the point of investing large amounts of money only to have no real way of having those products serviced or repaired should they go faulty? They choice is the that of the customers of course, but it may be wise to be a little more prudent when contemplating new products at this present time.

The company’s woes saw it become the most shorted stock in western Europe last week, according to Markit, with hedge funds betting that the share price would fall even further after more than halving since the summer. More than 12% of the company’s free-floating stock was held by those betting against the stock.

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B&O Magazine

Sunday, 25th January, 2015

BeoMagazine is a more than simply a digital version of the bi-annual print magazine from Bang & Olufsen. BeoMagazine contains both world class editorial and product-led content designed to appeal to the global Bang & Olufsen community. The digital magazine includes interviews with Bang & Olufsen’s designers and testers as well as famous musicians and leaders of design. Readers who enjoy premium travel and the luxury automotive sector are also catered for. Download the BeoMagazine app to access past and current issues updated bi-annually.

Check out the free BeoMagazine app for iPad too which gives you all the content from the Bang & Olufsen Magazine, plus magical functionality, unique imagery and stunning video for an enhanced experience of what’s new in the world of Bang & Olufsen.

Bang & Olufsen magazine

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RIP B&O (1925 - ?)

Thursday, 22nd January, 2015

New year, same problems

It is said that the demand for luxury goods has never been higher. Estimates vary, but some reports (see diagram below) value the 2014 luxury market at around 1,1 trillion US dollars (or 1,100,000,000,000 $US), including consumers who were trading up. That’s a huge market by any standards.

Even Ferrari, the Italian manufacturer of luxury sports cars has in these last few years started to produce more vehicles in order to satisfy the über-rich, a move it has long-resisted.

Yet despite the seemingly un-abounding desire for quality and luxury, Bang & Olufsen is feeling the economic pinch, with its recent sales actually going downwards instead of upwards as economic trends would otherwise suggest!

Luxury goods' sales 2014

Why is this? Is it because the company is no longer manufacturing what people need and want? Or is it that prices for the average Joe are just a little too expensive? A bit of both, we at BeoPhile suggest.

The company’s product line-up has never been so uninvolving, so drab and so unexciting. There’s always the case that where companies start producing ‘new, updated colours’ as ‘replacements’ for existing product line-ups which suggest that they have seriously run out of ideas, and in order to keep customers’ interest up, ‘this year’s colour’ or ‘this year’s curve’ is the best that they can come up with when they really cannot think of anything more to offer (as in today’s announcement by the company of ‘new, exciting colours’ for their recently-announced H2 headphones“now available in Deep Red and Shaded Rosa” (yawn).

Bang & Olufsen will never survive if it is to manufacture only for the super-rich. There are just too many companies already doing that; many on a much more personalised & individualised basis. Bang & Olufsen needs to offer products which are both appealling to those who can afford a 20,000-dollar TV paid with loose-change, and those have to save up for products for which they aspire.

Bang & Olufsen used to be a ‘lifestyle’ company, where a broad range of products flavoured every moment of a customer’s daily life. With Bang & Olufsen no longer manufacturing domestic phones, mobile phones, light controllers or MP3 players, to name but a few, the ‘cheaper’ BeoPlay range has instead chosen to concentrate on ‘personalised music’. With six head- and ear-phones now available, it looks a case of overkill, especially when the next step up in the product range still requires a third-party gadget (i.e. smartphone) to get the gadget to work. Bang & Olufsen will never survive just on headphones alone, we suggest.

The 90-year-old company Bang & Olufsen A/S (B&O) ended last year in the red. The Danish maker of luxury stereos and television sets blamed the loss on production failures and weak markets.

The company posted a pre-tax loss of 224 million kroner. Revenue during the period came in at 759 million kroner compared to 822 million kroner last year – a decrease of 8%.

Late products and high costs

Despite the gloomy numbers, management said that they are still looking forward to ‘high single digit’ growth over the entire 2014/2015 period.

Company head Tue Mantoni said part of the explanation for the loss was that a number of new products, including the company’s highly-touted 55-inch TV, could not be delivered on time. Production costs have also been higher than the company had anticipated.

Mantoni said that he still expects a strong ’second half’, but that it won’t be enough to compensate for the slow start. Mantoni has had to downgrade expectations three times since he took the top job in 2012. (Source : 20 January 2015)

Technology is changing fast - and has always done so, especially over the past couple of decades. But Bang & Olufsen really does need to keep a very steady eye on current technology trends and develop products around what people really want, rather what they ‘think’ customers actually want.

There’s still a place for the company to exist in the market, but they need to be very sure about market trends and adapt themselves around customers’ needs and wishes, and at a price which they can afford. If not Bang & Olufsen will be the last in a long line of Danish companies to fail, which would be very sad in this, their ninetieth anniversary year. If the company is to go on to celebrate its centenary, then Bang & Olufsen needs to buck up its ideas… fast!

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Down down down

Wednesday, 21st January, 2015

Bang & Olufsen posts a net loss for the second quarter

Bang & Olufsen yesterday announced a quarterly net loss of 72 million Danish kroner ($11.2 US million), compared with a year-ago profit of 8 DKK mln.

The company’s revenue slipped to 759 DKK million from 822 DKK mln. The company reported an operating loss of 95 DKK million, versus an operating profit of 31 DKK mln.

Down down down

The face of optimism

Despite the bad economic news for the company, it sees a strong second half to its fiscal year even though its second-quarter net profit was hit by production difficulties and higher-than-anticipated costs.

“The combination of a continued strengthening of the product portfolio…a more stable production rhythm, and further expansion of the distribution, as well as a stable development in Automotive, are expected to result in a strong second half of the year, with significant revenue growth and improved profitability compared to last year,” stated Chief Executive Tue Mantoni.

However, this won’t be enough to compensate for the disappointing performance in the first half of the financial year he stressed.

Lost the plot?

We at BeoPhile consider the current line-up of Bang & Olufsen products probably the weakest in the company’s history. With so few new products on the horizon (BeoLit 15, as replacement for the poor-quality BeoLit 12 is not exactly world-changing) and very little else to look forward to in the up-coming year, there’s not exactly a lot happening at the moment.

BeoSound Moment is by far the ugliest and incomprehensible product that the company has announced in many a year… after all, why does anyone actually need it when there’s already BeoSound Essence and BeoSound 5/Encore? The Moment offers nothing that a touch-screen smartphone played through a BeoPlay A8 doesn’t already offer. Or how about a Bluetooth receiver for any of Bang & Olufsen’s active speakers at just fifty euros? (Source)

Or even one for the BeoCenter 2 (sadly, no longer manufactured)?

Investors are hardly likely to be attracted to a company which is now seen to be producing more headphones and earphones than almost anything else, with six pairs now to aim for… one for almost every day of the week!

It’s time for Bang & Olufsen to wake up and smell the economic climate and take heed of what customers, old and new, really want. How about a sound bar, which are all the rage nowadays, made to produce room-filling sound at a reasonable price, which neatly sits under any manufacturer’s large-screen TV? Or Bang & Olufsen’s own replacement for the now defunct iPod Classic, which, since Apple ceased production, are very much in-demand? Or a swish radio, à la Roberts?

If Bang & Olufsen doesn’t wake up soon it will be time not just to put the company to bed but to give it its last rites!

Buy-buy B&O ?

To add to the company’s woes, share values fell even further upon the bad news. At 9h55 this morning Bang & Olufsen share prices had dipped a further 4,2% to 34,2 DKK (in the 52-week period up to 21 January 2015, share prices have fallen from 74 DKK to today’s vale of just 34,2 DKK (Source). A good time to buy, perhaps… but why buy Bang & Olufsen when, on the face of it, the company is looking down at the very edge of a steep precipice?

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