Strategy in TECH...
A relatively large number of readers and industry sources have reached out to Strata-gee with word of cutbacks and layoffs at various industry brands – as the impact of coronavirus (COVID-19) takes its toll on the U.S. economy. As was reported in a post just a few days ago, jobless claims jumped dramatically – by 33% in just one month – only to be exceeded a few days later by a massive jump in claims of 3 million more unemployed workers.
New research conducted this month shows another major impact of COVID-19 Coronavirus – the crash of consumer sentiment. A statistically significant survey of a representative sample of all Americans has reached concerning conclusions about consumer sentiment now and likely to prevail for months after the COVID-19 crisis passes.
Melrose Industries plc, the British turnaround specialist who acquires underperforming companies to improve their operations and management for resale, is now actively considering selling off the bulk of Nortek in a deal that could be worth $3 billion, according to reports from Bloomberg News and the Financial Times. If they actually execute this sale, it will be a relatively early exit from their ownership of Nortek which they purchased in 2016 for $2.8 billion.
This Friday, Sonos CEO Patrick Spence will testify before a Congressional committee (the House antitrust subcommittee) that is investigating the issue of competition in digital markets. Or, I should say, they are investigating whether the tech giants – Google, Amazon, Apple, Facebook, etc. – are engaging in anti-competitive activities in violation of the law. The Sonos CEO is likely to complain that Google is in fact anti-competitive. Spence’s appearance takes place literally just days after it has filed a major patent infringement lawsuit against Google – alleging that the tech giant stole its proprietary technology…making them a victim.
In a letter to the media early Tuesday evening, Richard Stoerger announced the likely impending closure of Audio Design Associates (ADA), a company that was a founding member of CEDIA and a significant driving force in the early days of the “CEDIA channel.” The letter itself never explicitly explains the reasons for the possible closure, only offering vague allusions to: difficulty to “defeat the noise generated on a public level”… and … that they “just ran out of time and money”… and … a failure to “reckon with” how “difficult and expensive” it is to tell one’s story.
For a few weeks now, I’ve been chasing a rumor that both sides of the failed Sound United acquisition of Onkyo’s branded A/V business were in the throes of a major reorganization. The rumors, it seems, were true – starting with Onkyo’s announced reorganization last week…and now word that Sound United is also implementing changes to its management structure.
It appears that the other shoe is dropping in the wake of the failed acquisition of Onkyo Corporation’s branded A/V division by Sound United last month, as the company now says it will reduce its overhead by cutting jobs. This appears to be the first step in a major reorganization of the company, as it seeks to right-size the organization for the industry’s new, smaller, and more competitive environment in which electronics manufacturers find themselves.
Toshiba Corp. announced this week that it has launched a large consortium of more than 100 companies in Japan for the purpose of creating new services and products to attack and drive the growth of the Internet of Things (IoT) market. Consortium participants are companies of varying size and capabilities that cover the entire spectrum of the market.
It was January 2018 when I reported that Sound United had completed its acquisition of Classé, an acquisition which had been first announced in December of 2017. In the weeks leading up to that December, former owner Bowers & Wilkins was considering getting out of the electronics business…maybe. After months of confusion, where on any day executives at Classé teetered back-and-forth between survival and demise – it now seemed that Sound United had thrown them a lifeline…a chance to live to fight another day.
And then they dropped out of sight for the last two years…
As you most likely know by now, Onkyo Corp. and Sound United have called off their transaction which would have transferred ownership of the 73-year old Onkyo brand, as well as the Integra, Pioneer, and Pioneer Elite brands to Sound United. The shocking news capped off a nearly five month process where many in the industry tried to figure out just how this deal made sense.
This was the second loss of a potential buyer for Onkyo, which admits it is re-evaluating its future based on the failure to sell off its brands.
