Christine at Marketnews has some perspective on the rash of mergers, proposed mergers, and strategic alliances that have cropped up lately among CE manufacturers and retailers.
MarketnewsGadgetTalk: Have Partnerships & Acquisitions Become a Necessary Evil in CE?
MarketnewsGadgetTalk: Have Partnerships & Acquisitions Become a Necessary Evil in CE?
In some cases, partnerships are indeed made to strengthen a company/brand by utilizing resources that the other can provide. In others, it's to "take out" the competition. But it appears that, as of late, we're seeing more and more traditionally considered "competitors" looking at one another and saying "I need you and you need me. We can't do this alone."
The impetus for her post is the looming dogfight over who's bidding for a 49% stake in D&M Holdings:
Dealerscope: Kenwood is Latest to Enter D&M Bidding
Another day, another new bidder for D&M Holdings. The Stratecon Group reported
Tuesday, citing Japanese news service Nikkei, that Kenwood has teamed up with Bain Capital to make a bid for D&M, a 49 percent stake of which is being auctioned off by RHJ International.
Stratecon added that final bidding is expected to take place in mid-May, and that the four “finalists” are Best Buy, the Bain/Kenwood group, Merrill Lynch, and Advantage Partners LLP.
Bear in mind that mergers and alliances don't always reap positive results. As one of my regular inside sources told me in an email today when I asked him how he expected it to shake out:
Depends on who gets it and how much they borrowed to pay for it. Do they expect a return this quarter or next? 2 quarters is long term planning for many of the suitors named. One thing is for sure, Boston Acoustics sure didn't gain any strength after the D&M takeover.
Just because everyone's rushing to make a deal doesn't mean that they'll be a winner even by time the honeymoon's over. Most analysts and industry watchers are certain that there's no way Blockbuster will scrape together enough loot to buy out Circuit City. And Best Buy's foray into Venture Capital and Private Equity has been called a sign of the
That said, I expect we'll see many more high profile pairings announced this year, even if they're totally goofy.
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2 comments:
Customers! Sheesh!
Some of them are just buying stuff because their friends are, too.
Some of them are buying stuff to make an impression.
Some of them are buying stuff because they have more money than brains.
Some of them are CLAIMING they'll buy something, but you know they're just kicking tires.
And most of the folks involved in this stuff are there because they don't want to be down on the sales floor with the 'customers'.
And the only guy who'll really make out in all of this is the Banker.
Some things change and some things never change, no matter how high you climb.
I would think scraping up the cash to execute the transaction would be secondary to the structural defects of the Blockbuster + CC proposal.
The distribution of media is in a state of flux which will increase in volitality and frequency as time goes on ala Moore's Law. Soon the competition will be AT&T, Comcast and the studios themselves. As issue related to "the last mile" are overcome and residential bandwidth grows, there will be room for only two, possibly three spaces for players to operate. 1) The provider of bandwidth, 2) The media provider (aka movie or TV studio) and possibly 3rd, the artist themselves providing direct to the end user, thereby cutting out the studio.
The future of home media will not include a middle man (Blockbuster or Hollywood video) in this person's humble opinion.
And don't discount the ability for someone like Mel Gibson or Ron Howard to cut deals with Comcast for direct in home distribution.
For the other side, CE has two driving elements in my world view - mass market and the high end niche.
Mass market is a price whores world and the the high end isn't large enough to support a national distribution infrastructure. Competing against price clubs, and Best Buys is daunting if you don't have a hook. CC lost their hook when they "downsized" their commission paid floor staff. I had a relationship with Matt S. in their Mishawaka, IN store. He knew what I had, what I liked and called if something would pique my interest. When CC got rid of him, they got rid of me.
All these dogs looking to do is hump each other's leg.
-CF
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