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Fender’s 1st Quarter Results

One of the benefits of Fender (FMIC) planning to go public is that they now have to publish their quarterly results. This is new and for years guitar players have wondered just how many guitars Fender is selling. We will have to wait for Fender’s first Annual Report to get a glimpse of actual unit sales but for the first time we have Fender’s 1st Quarter Results for 2012.

According to an updated regulatory filing today. Fender Musical Instruments Corp.’s first quarter net sales rose slightly and its net income declined on higher operating expenses. Fender saw its net sales rise 2.2% to $174 million in the first quarter, and its net income decline 73% to $1.9 million in the first quarter.

The filing indicates that the primary drag on its bottom line came from higher labor costs, as well as increased advertising and promotional expenses. Higher labor costs came from an increase in employees and salaries; in addition, stock options issued in the second and third quarters of 2011 resulted in an increase in stock-based compensation expenses. Higher advertising and promotional expenses were primarily related to costs associated with the Musikmesse tradeshow in Germany, which was held in the company’s first quarter this year; in 2011, it was held in the second quarter.

Fender hasn’t set a specific date or price yet for its IPO. The planned IPO comes during a nascent recovery in domestic guitar sales, which have ticked higher since plummeting between 2006 and 2009, according to the Music Trades, a magazine that covers the musical-instrument industry.

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Comments

7 Responses to “Fender’s 1st Quarter Results”
  1. faneclub says:

    If I read things aright Fender pretty much broke even, which on crude figures is a result in current economic terms.Lets face it a net minus 73% of pretty much breaking even equals the same unless you happen to be some sort of actuary. I’m a left handed guitarist so sell me something new – or vintage that i couldn’t buy before!

  2. faneclub says:

    A nascent recovery in guitar sales? New born Guitarists? Fender’s future will not be determined by Leh…… Bankers. If they do succeed it will be about great instruments. Financial pundits never created a great guitar.

  3. strat_tone says:

    I’d like to see the margins on the squier, made in Mexico, made in Japan, American and custom shop models. Clearly something is bringing them down. Sounds like they need to raise prices of certain lines. And move their factory out California to Utah or somewhere without business smothering regulations and taxes.

  4. ariecaster says:

    has this been shelved due to the crappy IPO market thanks to Facebook.

    Not that its great to have the company owned by a private equity firm but it will only get worse when public. Departments like the custom shop will no longer make sense to a public company. It will all be a numbers game. How many cheap guitars can you pump out to china.
    The last time I bought a new fender product was in 1989. Gear heads like me are buying boutique builder teles or making their own high end partscasters. Most music stores are filled with squires, MIM or MIJ or low end american. If they have any custom shop stuff its in a case and has been in the store for years.
    Remember the cbs days. Those guitars were avoided for years until recently they have become the poor man’s vintage. Stuff was covered in poly and felt terrible. Fender going public is great news to our boutique tele builders. My guess is 10 years from now people will be collecting pre IPO american fenders.

  5. pwrtwang says:

    I built my own partscaster because Fender isn’t selling a guitar configured as I wanted without turning to the Custom Shop. And as ariecaster pointed out … all the music stores are carryng the low end stuff. Guitar Center has pretty much eliminated all the other music stores around it in our area, and they don’t even have more than a handful of American Standards. Squires & MIM are the bulk of the Fender inventory there. Even the amps are the low/middle end suff. Can’t even plug into a Vibro-King there. It would be nice to be able to hold and play some of the Custom Shop stuff … I might be inspired to buy one. And I might be in the minority, but it seems most of the Custom Shop stuff is little better than a vintage configured production run that they beat the hell out of to appear old. Seems silly to to pay extra for THAT. I can build a custom config with the best boutique parts … exactly to my specs … for 1/3 of what one will set me back from Fender. Still … I might actually purchase a Custom Shop instrument if I could see it and play it.

  6. warrent says:

    Slate had an article on the IPO:
    slate.me/SgZWHp

    Its starts out:
    Fender’s initial public offering documents read like the 12-bar blues. …But the company has questionable global expansion plans, is loaded with debt, depends on a big shaky customer and generates only pick-thin margins.

    its a short article but values the company around $395 million at the top end but as the article sums up Fenders problems it leaves us with this note “Any purchase at the guide price would be worthy of the classic Clapton-enhanced refrain, “While My Guitar Gently Weeps.””

    Reuters also has an update here; reut.rs/NedMbw

    And on a more positive note the vintage market is getting better
    (Reuters) – Collectors and guitar fans have been whipsawed by the Elvis-pelvis gyrations of the vintage guitar market. Now they’re at a crossroads – is it time to pick up that choice instrument?

    Prices for prized guitars soared in the early 2000s as speculators jumped in, then the market plummeted by as much as 30 percent by the end of the decade.

    But after a few years of singing the blues, vintage guitars look ready to rock again – as long as collectors pick their investments carefully.
    more at reut.rs/KIICoz

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