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HTC Sales Falls 49%, $345M In Losses After One M9 Problems

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HTC who is believed to have the ‘Up For Sale’ sticker out has reported a 49% drop in revenue and a net loss of $345M loss.

In the first half of 2015 sales have fallen 57.7% the profit fall follows four quarters of slight net profits.

The Taiwanese Company has been hit by plummeting smartphone sales and valuation losses after production lines that were ramped up for the new One M9 were left idle.

HTC has announced a strategic shift to sell more mid-priced phones in emerging markets as opposed to more expensive ones in markets like Australia.

They have also moved to strip manufacturing costs.


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In the second quarter, its revenue totalled NT$33.01 billion, almost half the NT$65.06 billion it fetched in the second quarter of 2014.

 HTC doesn’t disclose its shipment number, but the company has said it has closed some of its production facilities as sales have dropped and as it has outsourced some of its manufacturing. 

The Wall Street Journal said that HTC was a top Android smartphone maker a few years ago, but its return to losses indicates how second-tier smartphone makers are struggling in a maturing market.

Low-cost smartphone makers, such as Xiaomi who does not operate in the Australian market because it is “too small” according to their Chinese executives, are grabbing emerging-market share quickly at a time when global smartphone shipment growth, particularly toward the high-end is slowing.

Despite praise for the sleek design of HTC’s flagship device for this year, the One M9, some analysts were sceptical, citing the phone’s incremental hardware upgrade from its One M8 last year.

HTC’s shares in Taipei sank to a record low of NT$71.10 on June 30, compared with an all-time high of NT$1,300.00 in April 2011. 

Chairwoman Cher Wang, who returned to day-to-day operations last year and has also been doubling as chief executive since late March, has said the company “is moving beyond the smartphone business.” It has recently launched a fitness band and a virtual reality device in overseas markets but not in Australia where the Company is trying to set up a sales network of retailers.  

Foxtel Tipped To Get Okay For Ten Network Share Acquisition

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ACMA is tipped to be close to announcing that Foxtel can aquire a 14.9 per cent stake in Ten Network Holdings.

The sicking point has been the fact that Lachlan Murdoch could control the Ten Network due to News Corporation owning 50% of Foxtel and Lachlan Murdoch a further 8.52% of the Ten Network via  his private investment vehicle Illyria.

Michaela Watson, who was manager of the Media Ownership Diversity section at the Australian Communications and Media Authority from 2010 to January this year, told Fairfax Media she would be “shocked” if ACMA rules that the deal breaches cross media ownership restrictions.

If ACMA allows the deal, which could happen as early as this week, Foxtel and its half-owner, the Murdoch family’s News Corporation, will have cleared the first regulatory hurdle in their concerted push to take a foothold in the $4 billion free-to-air television market.

Ms Watson, who is also a former director of mergers and acquisitions at the ACCC, believes the ACCC will not oppose the deal, despite it having expressed concerns the transaction could give Ten could an unfair advantage over its rivals Nine Entertainment and Seven West Media when bidding for sports rights.

Several submissions have been made to the ACCC claiming that the Ten Network and Foxtel will be in a position to control sports rights aquisitions. 

ACMA is  examining whether Lachlan Murdochs 8.52 per cent stake should be combined with Foxtel’s proposed 14.9 per cent stake for the purposes of the law.

If it was, his interest would surpass the ACMA’s 15 per cent interest threshold, making him a controller of Ten. (This is despite Telstra owning the other half of Foxtel, said Ms Watson).
That would trigger a breach of the two-out-of-three rule in four metropolitan markets – Brisbane, Sydney, Melbourne and Adelaide.

“Technically Foxtel and even the target, Ten, could be implicated in a breach because the prohibition catches ‘any party to the transaction’,” Ms Watson said.

Toxic Relationship Between Dick Smith And Bankers Led To Collapse Administrators Set To Claim

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A falling out between Dick Smith’s bankers and senior management at the mass retailer was fatal, an administrators report into the Companies collapse is set to report.

The administrators from McGrath Nicol believe that the relationship between the banking syndicate, led by National Australia Bank and HSBC was so toxic that the bankers simply pulled the plug on the mass retailer, despite evidence revealing that the Company could have survived had an injection of capital been injected into the ailing business.

Nick Aboud who was struggling to hold onto senior management and buyers at the mass retailer was one of the key negotiators with the banks along with Chairman Rob Murray.

According to Fairfax Media Dick Smith’s relationship with National Australia Bank and HSBC was barely six months old when the retailer announced a $60 million inventory write-down in late November and revealed it was “unable to re-affirm the profit guidance previously provided”.

Dick Smith management who have been accused of concealing trading and sales information from suppliers failed to alert the banks about the impairment charge with one insider claiming that “this was a fatal mistake”. 

Desperate to raise cash the management team is believed to have approached both Anchorage Capital the Company that initially floated Dick Smith raising over $500M dollars along with overseas investors.
 
Fairfax Media claim that the partnership with the banks who in December had moved their own management team into Dick Smith head office was further strained by Dick Smith’s repayment to Macquarie in December on a $30M unsecured loan provided to cover the upfront payment for Apple stock after the tech giant withdrew supplier credit in about October.

When the Company finally collapsed and Ferrier Hodgson was appointed as receivers it was revealed that the Company had been unprofitable for months and that Dick Smith owed the Bank and suppliers over $400M.

One source told Fairfax that the  banks “hated surprises” and NAB and HSBC were hit with several in quick succession from Dick Smith.

He said the bank was “shocked” by the stock write-off and the payment to Macquarie further inflamed the situation.

Dick Smith’s relationship with its banks is believed to have played a significant role in the collapse of the business.

“NAB was annoyed Dick Smith paid off an unsecured lender [Macquarie] ahead of reducing its facility with it, a secured lender,” he said.

The Federal Court has granted Dick Smith’s administrators McGrath Nicol a six-month extension to the schedule for its second creditors meeting, which means it won’t be held before August 9.

The receiver’s first report on Dick Smith’s New Zealand operation has identified a $NZ98 million shortfall in the funds available for priority creditors, and Ferrier Hodgson said it could not estimate how much of the $NZ32.8 million in stock would be recovered through its current fire sale through the network of 62 stores.

Pioneer Slammed By Channel Future Looks Grim

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Pioneer Electronics has been slammed after they announced earlier today that they had done another flip flop in a desperate effort to cement themselves a position in the Australia display and sound market. After taking an each way bet between the specialist and mass channel the Company has now decided to concentrate on the specialist channel in an effort to deliver bottom line profits over revenue and losses. However the specialist channel may not support them.

Interviews done with the specialist channel by ChannelNews reveal that they are sceptical claiming “They don’t have the balls” to pull it off. Others have said “I will believe it when I see it”.  “They are more interested in the mass market and have well and truly screwed the specialist channel in the past you only have to look at their web site to see this”.

During the next few months the Company claims that they will roll out an arsenal of new products including new plasma TV’s, a new generation of LCD TV’s made by Sharp as well as new home theatre kits, and high end sound systems all aimed at the specialist channel.

To facilitate the move newly appointed Pioneer Electronics Australia Managing Director Yasuo Sakuma has restructured his management team and is set to start rolling out new products however the specialist channel that Pioneer desperately need to support them do not trust Pioneer claiming that “Every year they change their mind in 2009 it will be back to the mass channel”.

Len Wallis of Len Wallis Audio in Sydney said “I don’t know whether they have the balls to pull this off, one minute they are in the specialist channel the next they are chasing mass retailers. They are constantly out of stock despite having excellent products”. He said.

 

He added “I have dealt with Pioneer for 30 years and they have constantly changed their loyalty. They very quickly drop their pants when the big boys call their bluff and say jump they jump”. 

Adam Merlino a director at Pioneer specialist reseller Audio Connection in Sydney said “I will believe it when I see it. Their stock levels are always low and right now we have back orders for Pioneer plasma screens that they cannot fulfil”.
Peter Alexandrie of Audio Lifestyle in Melbourne who is also a specialist Pioneer dealer said “I don’t trust any of them. We set up nice show rooms, we spend hours of our own time going to training at Pioneer and they then go out and sell to the mass retailers who sell their product below our buy in price. The mass retailers know this and us as a benchmark so that they can sell under our plasma screen price”.

Another Sydney dealer who has dealt with Pioneer for 14 years said “It is all bullshit. They are in deep trouble and they now expect the specialist channel to bail them out. You only have to look at their web site where they have a preferred partner indicator. If you type in for example a 2000 code postcode the site spits out Pioneer partners within a 5klm radius. Not one of the top 10 is a specialist reseller it is all Bing Lee, Harvey Norman, JB Hi Fi and Domayne. There is your answer to what Pioneer think of the specialist channel”.

 

Mark Anning Marketing Manager for AV at Pioneer Electronics said “We have some bridges to mend. The past is the past we can only make decisions now and move forward from it” he said. “We are going to have face to face meetings with many of our partners in the specialist channel over the next few weeks”  Anning also revealed that Pioneer will not have new plasma or LCD TV models until the end of the year and that during that period they will roll out new sound and home theatre systems.

ChannelNews has conducted an extensive interview with Pioneer this will appear during the next few days.

Telstra First-Half Profits Soar

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Telstra has reported a first-half profit of almost $2 billion dollars an increase of 13 per over the same period last year. They have also raised their guidance for full-year revenues after achieving $12.4 billion in earnings.

“We have again exceeded analyst consensus, delivering not only strong top-line revenue growth but also accelerating earnings at the bottom-line,” Telstra chief executive Sol Trujillo said.

“Our transformation is revitalising every aspect of the business and we now rank at or near the top of our global peer group on many key financial performance measures.” 

Earnings upgrade

For the fiscal 2008 year, Telstra now expects total revenue to grow by 3 to 4 per cent, up from guidance of 2 to 3 per cent.
 
Earnings before interest, tax, depreciation and amortisation (EBITDA) is forecast to grow by 4 to 5 per cent, up from guidance of 3 to 4 per cent.

Earnings before interest and tax is projected to grow by 6 to 8 per cent, up from guidance of 5 to 7 per cent.

Telstra said its first half result was underpinned by strong sales across all its retail business units and key product, including broadband, mobiles, traditional fixed line or PSTN services and its online business Sensis.

“We are growing in the key markets of the future while securing our traditional core business,” Mr Trujillo said.

“Despite fierce price competition, we have again won broadband and post-paid mobile market share from competitors and grown average revenue per user (ARPU). We have again defied global trends by growing our retail PSTN business.

“And given this strong overall performance, we have raised guidance,” he said.

Mr Trujillo said the company was committed to taking part in government plans to set up a high speed broadband fibre-to-the-node network.

Telstra “looks forward” to talks with federal communications minister Stephen Conroy.

 

Major Top Level Management Shake Up At LG

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LG Electronics Korea, used the evening before Thanksgiving in the USA, to announce major management changes to their struggling smartphone operation as well as at to their appliance and air conditioning business.

This is normally done when a Company is trying to hide

information as most US news organisations have already cut back staff for what

is the biggest holiday break in the USA.


The major leadership change announced by LG, will see

control of LG Electronics operations split three ways between Jo Seong-jin,

president and CEO of Home Appliances & Air Solutions, Juno Cho, president

and CEO of Mobile Communications and David Jung, president and CFO. 

The Company that is struggling in the mobile business both

domestically in Australia and globally, is also facing some tough decisions

over their TV business with LG Display looking for partners to fund a new OLED

manufacturing plant.

In Q3 2015, LG Electronics generated US$3.67 billion, from

Home Entertainment, US$2.89 billion from LG Mobile Communications, US$3.55

billion from Home Appliance and Air Solutions and US$409.41 million from LG

Vehicle Components business.

In Australia LG has failed to announce a replacement for

Michael Doyle their former sales director who suddenly quit the Company two

months ago.

ChannelNews has been told by two leading recruitment

executives that several people have been offered the position but have refused

due to perceived “culture problems” that exist at the Korean Company.

One recruitment executive said “We have proposed a number of

people, but they have refused to put themselves up as candidates. Michael Doyle

was an excellent sales director who got business because of his personal

relationships with retailers, unfortunately he failed to develop a prodigy or

deputy who could easily be promoted to take on his role”.

Wayne Park, currently global sales and marketing officer,

will be executive vice president and head of LG’s European Operations.

 Brian Na will be

responsible for LG’s Overseas Sales and Marketing operations which includes

Australia where the Company recently appointed Angus Jones as the new General

Manager of Marketing for LG Australia’s marketing operations.

The big question now is how long will Jones last, he is a

former marketing manager at Dell, a Company who invested more in direct

response marketing than brand and mass consumer electronics marketing. 

 

To date Jones has refused any requests for an interview with ChannelNews.

During the past five years LG Australia has seen several

senior marketing executives join the Company only to quit after a short while

due to differences with Korean management and the work culture at the Korean Owned

Company.

 In 2009, the Company

appointed David Brand a former senior liquor industry marketing director, as

head of LG marketing, he quit in 2010 after LG Australia was fined $3 million

for falsifying claims about their air conditioners.

“David came on board in 2007 and has had a profound

influence over LG Australia’s marketing activities” said William Cho, the

then Managing Director, of LG Electronics Australia. “His efforts to

enhance LG’s brand within the local market have been heavily valued by all

parts of the business”.

Brand told ChannelNews that he could not get out of the

Company “quick enough”.

Also quitting in 2010 was Carli Wilson, the former Marketing

Manager of LG’s Communications Division.

LG Australia then appointed Nick Gibson as Marketing

Director, a former senior marketing executive at Electrolux and Johnson and

Johnson, he was also the former Vice President of Product Development Asia

Pacific for Fabric Care.

He quit after LG was exposed by Choice Australia for duping

Australian consumers by using an illegal device within some fridges to make

them appear more energy efficient. The Company was fined $4M by the Federal

Court and place on strict monitoring of their marketing.

Then in 2012 LG lured Lambro Skropidis to the Company, the

former marketing director of arch rival Samsung Australia, Skropidis also quit

the role this year to take up the role as head of marketing at Electrolux.

LG Australia’s Head of Mobile Communications, Jonathan

Banks, also quit the company in March 2015.

Globally David Jung will look after sales and marketing,

global production and quality management in the role of Business Administration

Officer, said LG.

LG said that they expect its next high-growth areas to be

energy, IT, B2B and its automotive business, according to a press release

announcing the management changes.

Freeing up these businesses will allow them more of an

opportunity to excel independently without getting bogged down with the poorer

performing areas.

Cisco to buy EMC rumours persist.

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Rumours that CISCO are set to buy storage outfit EMC will not go away. According to US web site Search Storage Word Cisco is considering a $56 billion dollar acquisition of EMC.

Search Storage at www.searchstorage.com claim that when Sun Microsystems announced that it would acquire StorageTek for $4 billion a couple of weeks ago, most people rubbed their eyes in amazement and read the news again. As for Symantec buying Veritas, no one in their right mind had put these two companies together. They were just so different.

But getting into adjacent markets is the name of the game these days to sustain the strong revenue growth that’s come to be expected of large technology suppliers. Two companies gobbling up adjacent and emerging market players faster than you can say “storage virtualization” is Cisco and EMC. (We’ll come back to the v-word later.)

Search Storage also claims that what’s interesting about some of the company’s Cisco and EMC are acquiring is that they overlap each other.

EMC recently acquired network management software company Smarts for US$260 million while Cisco has forked out over US $400 million for Actona Technologies, FineGround and TopSpin – all considered storage networking companies at one stage or another. Brocade too, recently took its first steps into a new market outside of storage buying server provisioning company Therion Software.

However, buying a little bit here and little bit there gets you incremental growth but not dominance, which is why the rumour that Cisco is in talks to acquire EMC for $43 billion, might just be worth considering.

A quick look at the numbers shows that Cisco can easily afford to buy EMC. Cisco has a market capitalization of just over $121 billion and $24 billion in sales while EMC has a market cap of $32 billion. Buying EMC for $43 billion represents about a 30% premium, pretty steep but not out of the question.

From Cisco’s perspective

Cisco has saturated the networking market, but still has to grow. However, its choices are limited. Microsoft owns the desktop. The server market is commoditized by IBM, Dell and HP with IBM taking the lion’s share of the services business. This leaves storage, which happens to be the only growth area left.

Buying EMC would give Cisco another chunk of the enterprise and tremendous sway with customers. Its mantra for some time has been that users want fewer suppliers to deal with and products from companies that they can be sure will be around a year from now.

Cisco would also like to see as much functionality as possible moved into the network, including storage applications, which it has slowly been tapping away at for a while. With 10 Gigabit Ethernet on the horizon, Cisco might also have its sights set on finally nailing the coffin on Fibre Channel, to bring storage networking and data networking together over the same pipe. Buying EMC could put an end to Fibre Channel diehards Brocade and McData in one fell swoop. There’ll be no such thing as a SAN company anymore. Cisco would probably say who cares if it’s IP or FC or telephony anyway, as long as it’s always available, secure and runs everything?

From EMC’s perspective

The company’s shareholders get a healthy premium. Looked at another way, what is EMC’s risk in not doing this deal? It may be at the top of its game right now, but what does the future hold? Can it really be a major software player outside its customer base in an industry where proprietary barriers to heterogeneity are still significant? Can it ultimately triumph in the midrange, which is clearly going to be the heart of the market for at least 5 years, against more technically and commercially aggressive players?

Before the going gets tough, EMC CEO Joe Tucci has the chance to sell the company to Cisco, exit on a high note and probably earn himself a fat $200 million or so in the process.

Who wouldn’t want VMware?

Returning to the topic of virtualization, Cisco will undoubtedly be licking its lips at the idea of owning server virtualization leader, VMware. This business, owned by EMC, reported first quarter revenues of $80 million — that’s a year-over-year increase of 104% in a brand new and rapidly growing market.

But in the grand scheme of things, virtualization should not be a separate technology for storage and for networking and for servers as this adds complexity for users. It should be a single technology. Owning VMware would give Cisco the opportunity to create virtualized servers, storage and networking under one umbrella — in other words a very powerful, long-term play.

Do users benefit?

Like Sun’s justification for buying Storagetek and Symantec’s for buying Veritas, Cisco will argue that fewer suppliers makes purchasing and deploying technology much easier for users.

By acquiring EMC, Cisco might also be able to pull off storage on demand or utility storage, which requires standardization of all the pieces of the infrastructure to make it as simple as turning on a tap.

Then again, all that might not work and users might end up with less choice, less bargaining power and lot of hassle in the process.

More downsides to the deal

Storage could also become a commodity faster than Cisco can absorb EMC — thereby driving the company’s margins down. There’s also a chance Cisco will alienate IBM, damaging a partnership that spans a decade.

Then there’s the challenge of integrating these two giants: one on the east coast of the US, the other on the west. And after paying a premium, can Cisco really integrate the two firms to get the efficiencies needed to become a dominant player?

The Cisco/EMC rumour may turn out to be just that, but it seems certain that more large-scale mergers are on the horizon in storage.

AS TIPPED: Kogan Snares Dick Smith + Move Brand Names, 1M Customer Database + Online Operations

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As we exclusively tipped last month the Dick Smith and Move brand names along with all trademarks and online operations as well as the names and address of over 1M Dick Smith customers has been sold to online retailer Ruslan Kogan, several Companies sought to buy the package.

The deal is set to be used to spearhead a $300M float by the online retailer, who still plans to keep his Kogan online brand. Currently Kogan is working with investment banks UBS and Canaccord Genuity to prepare a public float in the second half of this year.


Kogan has told executives from the receivers Ferrier Hodgson, that the Dick Smith brand name will have “more appeal” to investors when he floats despite the fact that it is seen as a failed brand. 

Currently the Dick Smith online business is generating between $85 and $100 million a year. 

The acquisition includes all online operations in Australia and New Zealand as well as the Dick Smith and Move customer databases, which could create problems for consumers who face being bombarded with emails from the Kogan operation as opposed to the prior Dick Smith Company.  

The deal was secured after three weeks of negotiations with Ferrier Hodgson the receiver of the failed Dick Smith retail operation.

 ChannelNews understands that Kogan has paid less than $10M to secure the deal.

What is not known is whether the acquisition of the tarnished Dick Smith brand name will impact his Kogan online operation, or whether large consumer electronic brands who sell the bulk of their product via Harvey Norman and JB Hi Fi will actually deal directly with Kogan who currently is forced to buy most of his branded stock from either overseas grey marketers, or distributors who are adding an additional margin over what JB Hi Fi and Harvey Norman pay. 

ChannelNews has been told by one major retailer that representation has already been made to several key brands regarding the supply of stock to Kogan.  

According to sources Kogan sees the Dick Smith brand as the centre pin of his planned float.   
Kogan who refuses to make his financials available claims that the deal will boost his sales by $90M.

Kogan claims that Kogan.com is generating annual sales of close to $250 million however these revenues are unsubstantiated.  

“Dick Smith is one of the most iconic Australian retail brands and we will be able to leverage the millions of dollars we’ve invested into online retail systems and architecture over the last decade to sustainably run the business,” Mr Kogan told Fairfax Media.

Mr Kogan acknowledged the damage to the Dick Smith brand since the retailer’s collapse in January and said he would invest to rebuild consumer trust and make Dick Smith’s online offer “better than ever.”

“Ultimately, a brand grows when it delivers on its promises. We will work tirelessly to exceed the expectations of every Dick Smith customer with a beautiful shopping experience,” he said.

Smart New Wireless Speakers To Be Launched By Cambridge

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Cambridge Audio is set to launch a new AirPlay and Bluetooth-enabled speaker system in Australia called Minx Air.

The Cambridge Audio Minx Air 100 and 200 are set to be sold via specialist dealers in Australia. They allow a user to stream music from a smartphone or tablet.

The smaller Minx Air 100 model features two BMR (Balanced Mode Radiator) drivers, while the Minx Air 200 also adds a 6-inch subwoofer into the mix.

The speaker systems also have a Minx Air companion app, which allows users to access over 20,000 internet radio stations, as well as controlling volume and EQ settings.


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Built using Cambridge Audio’s patented BMR speaker technology, the Cambridge Audio Minx 200 features Digital Signal Processing capabilities that combine with the speaker to produce louder and fuller sounds than similar sized traditional speakers.

An on-board subwoofer offers enhanced bass tones and 200 Watts of sound power will bounce sound around any room despite the Cambridge Audio Minx 200’s compact design.

The compact speaker system connects to the majority of smart devices, including any Bluetooth enabled phone, tablet or computer. Utilising the Apple AirPlay technology, the Cambridge Audio Minx 200 will synch with desktop based iTunes libraries and to Apple devices like the Apple iPhone 5 or iPad mini.

Once set-up, any synched device will remain connected and play any audio application through the Cambridge Audio Minx 200 speaker system automatically. Music streamed from services such as the BBC iPlayer Radio, Spotify or YouTube can also play through the Cambridge Audio Minx 200 via any of the connected smart devices.

EXCLUSIVE:How A The Good Guys, Steinhoff Deal Could Seriously Hurt Harvey Norman

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If Gerry Harvey believes that a combined JB Hi Fi and The Good Guys, is a threat to his business, then he might want to think twice, because lurking in the background is a Company that could create a lot of grief for the mass retailer.

Steinhoff International is a multibillion dollar South African Company that is still in the hunt for The Good Guys, the big difference is that their target is well and truly Harvey Norman.

According to ChannelNews sources Steinhoff who is capitalised at $31Billion dollar and is the owner of several leading European Furniture operations is exploring the concept of combining, The Good Guys appliance business with a brand new furniture/appliance business that could also see Freedom Furniture a Company they already own in Australia, rolled into a combined operation that takes on Harvey Norman directly. 

This is a Company that currently sells at the top end of the furniture business in Europe via their Conforama retail chain in France and at the value end similar to their Freedom Furniture operation in Australia. 

Steinhoff management believe that Harvey Norman who is making more money from furniture than electrical goods and appliances, because of the high margin that furniture and bedding returns.

Their research indicates that Harvey Norman is a target that can “easily” be attacked because of their franchise model and their management structure and the fact that Steinhoff can manufacture premium and budget furniture and bedding, cheaper than Harvey Norman can source furniture or bedding for the Australian and Irish markets. 

According to former Harvey Norman management furniture and bedding is a “massive” profit earner for the mass retailer.

“The profit margin in bedding is over 100%. They said staff are able to buy bedding at staff rates that are half the retail price.

“A top end mattress that is selling for $6,000 is available to staff for $2,890” they said.

“There are similar margins in furniture” they added.
 
What Harvey Norman refuse to do is break out the revenues or profit margins for furniture or electrical when they report their quarterly results.
 
Recently the French furniture group Conforama which is owned by Steinhoff International threw in the towel in its quest to buy European white-goods retailer Darty a group that is very similar to The Good Guys. 

This has left them in a position to refocus on a potential acquisition of The Good Guys in Australia.

One person involved described the battle between Steinhoff and Fnac who is listed in London but operates stores in France and was the final winner in the fight for control of Darcy as “an epic battle”, this could be a sign that JB Hi Fi could be in for a fight to get control of The Good Guys. 

Sources have said that Steinhoff management has also been talking to Woolworth about their Masters properties, as they are currently exploring the concept of launching large warehouse type stores that will sell a combination of appliances and furniture, a move that analysts claim could also impact Harvey Norman.
One analysts suggested that It’s Gerry Harvey who should be offering his business to Steinhoff International and not The Good Guys.

According to sources at The Good Guys the Muir family have told interested parties that there is “no way” that they will sell the retail group to Harvey Norman due to previous run ins by Gerry Harvey with Ian Muir the founder of The Good Guys.

Steinhoff was founded in 1964 in the UK, Steinhoff owns the high street brands Cargo, Harveys Furniture, Bensons for Beds and Sleepmaster. 

In 2011, Steinhoff bought Conforama, Europe’s second largest retailer of home furnishings, with over 200 stores in France, Spain, Switzerland, Portugal, Luxembourg, Italy and Croatia.

Steinhoff’s South African brands include HiFi Corp, Pennypinchers, Timbercity, Pep, Ackermans, Shoe City, Incredible Connection, and Unitrans.

Prior to announcing their interest in The Good Guys, the mass CE retailer who has approximately 3% of the appliance market currently was aiming for 75 JB Hi Fi HOME stores by the end of financial year 2017.

At the close of market on Friday night JB Hi-Fi’s shares were trading for $23.87, giving them a market capitalisation of $2.4 billion. Meanwhile, the company has achieved EBITDA just shy of $250 million in the 12 months to 31 December 2015, putting them on an EBITDA multiple of around 9.3x.

Assuming that The Good Guys was worth roughly the same EBITDA multiple, that could mean JB Hi-Fi would need to pay close to $1 billion for the business.
On the other hand Steinhoff who after backing out of a $1.6B deal to buy Darcy are now in a position to go after The Good Guys.