May Issue - FOH Online

continued from cover
Harman, based in Northridge, CA, is a huge
player in the pro audio industry, particularly
in touring sound, installed systems, broadcast
and music recording. However, approximately
two-thirds of Harman’s revenues are from sales
of GPS, stereo and entertainment systems to
upscale automakers including BMW, DaimlerChrysler
and Porsche. DaimlerChrysler alone
accounts for 25 percent of sales.
New York-based KKR specializes in leveraged
buyouts (LBOs). A common outcome for
LBOs is a restructuring of the acquired company
via a sell-off of underperforming divisions
and other cost-cutting measures, to create a
leaner core entity that can then be resold at a
profit.
That’s likely to occur in Harman’s case;
what’s less certain is how it will take place.
Harman’s automotive group remains the star
performer, suggesting it will be the cherry at
the center of any subsequent deal. But the
automotive group has its own problems: revenues
from Harman’s consumer electronics
group are often mixed in with those of automotive,
and market researcher firm iSupply
released a finding in April predicting that the
consumer electronics sector will experience a
“significant slowdown” over the next five years,
with growth slowing from 8.9 percent top
3.6 percent. That will affect most electronics
manufacturers, including Harman. Secondly,
automobile sales have hit a brick wall in recent
months, with certain high-end brands including
Mercedes feeling the pinch. It’s a trend that
hits at Harman’s bread and butter.
On the other hand, the Harman Pro Group’s
earnings show consistent, if not stellar, growth
in an industry sector that is poised to expand
as high-definition audio becomes a bigger
attraction for broadcast and entertainment
products. Touring continues to increase, creating
additional demand for live sound technology;
the so-called CEDIA channel of installed
AV is also showing steady growth.
In other words, KKR may not know one end
Adamson Modifies
Sales and Support
in Europe
TORONTO — Adamson Systems
Engineering has announced a new
and improved European support and
sales structure. As of April 1, Adamson
implemented factory direct sales to dealers
and distributors throughout Europe.
Previously, France based DV2 managed
all EU territories, but will now maintain
distribution duties for France and Belgium
exclusively. DV2 will continue as a key partner
to the overall support throughout Europe.
Countries with established distribution
are France & Belgium (DV2), Spain
(Lambda/2), Italy (Reference Laboratory), The
Netherlands (Sound & Light Import), Czech
Republic (Mediatech Spol.sr.o.), Greece &
Cyprus (Enttech S.A.) and Russia (I.S.P.A.).
Adamson has retained Andy Weingärtner
in the chair of European sales manager, to
provide sales support for both existing and
new customers. All sales will be processed
through the Adamson headquarters in
Canada. Adam MacGillivray will act as the
European liaison for all factory direct sales,
distributor sales and new customer inquiries.
Adamson added Jochen Sommer as a key
technical support contact for Europe. DV2’s
Didier Dal Fitto will continue his role as a
senior support manager.
of a microphone from another, but at some
point they will likely realize they have a small
gem in this package.
“The Harman Pro Group has a great set of
brands in an industry that’s going to need professional
technology to make HD sound,” said
Paul Gallo, president of the Professional Audio
Manufacturers Association, of which Harman is
a member. Gallo discounts the potential for an
LBO for the pro group and says that as KKR becomes
more aware of the growth possibilities
in areas including live sound and house-ofworship
markets, the more they’ll be inclined
to keep the entity together.
Not everyone agrees. One former Harman
executive speaking on background pointed
out that KKR historically hangs on to very little
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of its acquisition portfolio and that as good as
the pro group’s numbers are — they accounted
for a little over $517 million in revenues last
year, which is 16 percent of overall revenues,
according to the company’s 10-K filing on
the SEC website — they are still niche-market
small change compared to the billions that
even a slowing consumer automotive/electronics
market accounts for.
What Harman can expect under new ownership
is more of what the parent company
had already been imposing, probably with the
intent of making the pro group attractive as
part of the larger package: elimination of more
v.p. positions, and more centralization of operations
— for example, Harman relocated its
AKG operations from Nashville to Northridge
News
Harman International To Be Sold
last year, cutting the jobs based there. The
moves have made Harman Pro Group leaner
but at the same time somewhat less nimble
in terms customer service, the source pointed
out, crucial in an industry still based largely on
personal relationships.
Harman Pro Group can expect some reconfiguration,
including the possibility of consolidation
of brands, another source close to the
company said. But the consensus is that end
users will likely see little impact. “The products
are there, the supply channels are still largely
there,” the source said.
Not many people know that RCA is owned
by the French. In the end, as long as the quality
of products remains high, end users likely have
little concern precisely who owns what.
2007 MAY
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