Strategy in TECH...
Credit rating agency Moody’s Investors Service has downgraded the credit rating of Wirepath LLC (corporate name of SnapAV) from B2 to B3 in the wake of their announced acquisition of Control4. The primary reason for the downgrade is due to the fact that SnapAV will be forced to increase their debt by an additional $390 million to a new high of $683 million in order to close on this acquisition.
Although the US is in the midst of a record period of economic expansion, more and more troubling signs have appeared over the last few months in the form of negative economic data points to suggest that a turn in the economy may be coming. This week, a trio of new reports – consumer confidence, sales of newly constructed homes, and corporate earnings revisions – suggest that economic growth is stalling and that “turn” may be here.
In the wake of the recent announcement about the acquisition of Control4 by SnapAV, all executives associated with this deal have not been available to the media…their lips are sealed. But Control4 is a public company – at least until this deal closes and they go private – and a recent filing gives a dramatic, detailed view of how hard the parties worked to make this deal happen, and why Control4 really, really wanted to be acquired.
Last week’s Strata-gee story on the final liquidation of what remains of Thiel not only drew a huge number of readers, it also sent a big chunk of them on to the auctioneer’s website (McLemore Auctions). Many of those readers who journeyed to the auction were in search of a great deal on a good line of Thiel speakers. But then, in an unexpected twist, a source reached out to Strata-gee to offer a warning to those in search of a great deal on Thiel.
The long sad saga of Thiel is just about over for good. Having entered bankruptcy in October 2018, an auction house has finally been selected and started the process of liquidating all that remains of the former Nashville, Tenn-based Thiel…including Thiel Loudspeakers, Aurora by Thiel wireless music systems, and detritus from the Aurora Studio live streaming music studio.
Alex Camara, CEO of Seattle-based specialty electronics manufacturer AudioControl, was featured Friday on a segment on the Fox Business Network (FBN) talking the real impact of tariffs on American manufacturers. In the wake of the move by the Trump administration pushing a dramatically increased 25% tariff on a wide range of Chinese goods, Camara explained to FBN anchor Liz Claman the true impact these tariffs have on his business…and ultimately the American consumer.
We seem to be in a week of big deals. First, we learned that SnapAV had acquired Control4, then we learned that the original founder of Paradigm has acquired back the Paradigm, Anthem, and Martin Logan brands from the private equity company that had bought the company from him some time back. Now we learn that Sound United, owner of Denon, Marantz, Polk Audio, Definitive Technology, HEOS, Classé, and Boston Acoustics has entered into an agreement with Onkyo Corp. to purchase Onkyo’s premier lineup of brands, including: Onkyo, Integra, Pioneer and Pioneer Elite.
Emerald Expositions Events, Inc. (NYSE:EEX), a leading provider of trade shows and events and the current owner of CEDIA Expo, announced their financial results today for the first fiscal quarter of 2019. And while this tends to be a rather mundane or even robotic process, there were a few things unique about this report from Emerald – most notably their head-scratching comments that dramatically contrasted with the numbers.
LG Electronics Inc., a leading manufacturer in a diverse range of businesses, announced their fiscal 2019 first quarter results this week. With consolidated sales of KRW (Korean won) 14.92 trillion ($13.27 billion) and an operating profit of KRW 900.6 billion ($801.25 million), the company showed respectable numbers, but those results that represented a decline for the quarter.
Last week Sonos (Nasdaq: SONO) announced a new CFO to replace current CFO Mike Giannetto, whose retirement was unexpectedly announced almost as an afterthought in a February report of Q1 fiscal results. Late in the text associated with those results, CEO Patrick Spence, in an almost casual fashion, thanked Ginnetto for his service and told investors the CFO was retiring…a total surprise to the market. Sonos stock dropped double digits…and dropped even though the company had reported a record first quarter. (Read my report to see troubling signs within the ‘record’ Sonos quarterly report…)
