From Bloomberg News:

By Meera Bhatia
     March 14 (Bloomberg) -- Bang & Olufsen A/S, the Danish
electronics maker that ousted its chief executive officer
earlier this year, cut its sales and profit outlook, citing a
``difficult'' market.
     The company now expects full-year sales between 4.25
billion kroner ($890 million) and 4.35 billion kroner, down from
a previous estimate of 4.45 billion to 4.55 billion kroner.
Operating profit is now likely to be in a range from 225 million
to 275 million kroner, down from an earlier forecast of as much
as 425 million kroner, B&O said today in a stock exchange
statement.

From Bloomberg News

By Meera Bhatia
     March 14 (Bloomberg) -- Bang & Olufsen A/S, the Danish
stereo and television maker that ousted its top executive this
year, cut its forecasts for the second time in two months as
U.S. demand for luxury electronics withers.
     The shares plunged, losing a quarter of their value. Full-
year sales will be between 4.25 billion kroner ($890 million)
and 4.35 billion kroner, down from January's estimate of 4.45
billion to 4.55 billion kroner, Struer, Denmark-based B&O said
today. The company almost halved its operating profit forecast,
saying it's likely to be as low as 225 million kroner.
     Bang & Olufsen, whose BeoVision 7 40-inch television with
DVD player costs about $13,250 in the U.S., lost more than a
quarter of its value on Jan. 9 after saying pressure on American
and British incomes had led to ``disappointing'' holiday sales.
Torben Ballegaard Soerensen was removed as CEO the next day
after more than seven years in the job. European sales also fell
in the third quarter, B&O said today.
     ``Recent economic development has influenced both the U.S.
and several European markets negatively,'' the company said in
its statement. ``Retail sales are seen as being very
unpredictable at the moment.''

                          Shares Slide

     The stock was down 69 kroner to 238 kroner at 9:08 a.m. in
Copenhagen trading, the lowest in more than four years.
     The company's three largest markets, Denmark, the U.K. and
Germany, have been ``disappointing,'' while sales in Asia and
markets including Russia ``remain positive,'' it said. Sales of
the company's audio-visual products are expected to be
``slightly below'' last year for the rest of the financial year.
     ``They are mainly citing macroeconomic developments, and we
agree,'' said Rune Moller, an analyst at Jyske Bank A/S, who
said he'll now cut the stock to ``accumulate'' from his previous
``buy'' recommendation. ``Private consumption is slowing in
Europe and the U.S.''
     Operating profit will be 225 million to 275 million kroner,down from an earlier forecast of as much as 425 million kroner
the company said. B&O is scheduled to report third-quarter
results on April 8.
     ``We believe that they need a blockbuster product launch
this year,'' Moller added. ``They need a blockbuster product
launch every year and we didn't get one so far this year.''

--Editors: Keith Campbell, Paul Jarvis.

Thanks for the update. 

I will not re-open the B&O strategy debate but there is a cold economic wind blowing around the world at the moment and all makers of high-end goods may find that there are some difficult times to come in the next few years. This article reinforces that.

 Simon

It's sad but true... It's going to be a tough couple of years for the high end/luxery markets...

looking at these figures  B&O  imho very optimistic

they've got nobody but themselves to blame , i'm afraid

too much concentrating on the next ott design and not enough on the basic features that everyone takes for granted

also , bno used to be cutting edge in that they would adopt new technology much more rapidly

i recall their stance on cd etc was pretty radical in the 80's - very early adoptors compared to their competition

now with blu ray and the net integration their tech dept. should be chomping at the bit 

 

 

We had the B&O strategy debate when the first profits warning came out.

I think it's symptomatic of the experiences a lot of companies selling luxury products will be having as the world economy slows down.

 

Flappo The Grate:

they've got nobody but themselves to blame , i'm afraid

too much concentrating on the next ott design and not enough on the basic features that everyone takes for granted

also , bno used to be cutting edge in that they would adopt new technology much more rapidly

i recall their stance on cd etc was pretty radical in the 80's - very early adoptors compared to their competition

now with blu ray and the net integration their tech dept. should be chomping at the bit 

 

As a comparison, how are other high end manufacturers doing on the whole? Wether it be Louis Vuitton, Giorgio Armani, Sunseeker Powerboats, Helicopter Manufacturers, Lear Jet makers, Rolex, Cartier etc etc

It's fine blaming a global economic downturn, but if the others are forging ahead we have a problem!!  Anyone want to have a 'research' and report their findings?

Lee

In general, the worldwide luxury market has grown powerfully since 2001, driven by demand in Asia (not Japan) and the former Eastern Block, but also fueled by generous lending programmes in the US and Europe which put a lot of money in the pockets of consumers. The LVMH group has had outstanding growth in this period, as have many other luxury brands.

B&O has not managed to keep up, in many analysts' opinion a function of the CE market being more price sensitive and also as a function of B&O not being seen as driving innovation in the category, leading customers to bleed off to other brands. (And believe it or not, B&O is not seen as luxurious enough by quite a few customers in this segment.

Of course, things are tanking now, worldwide, as a function of the financial meltdown happening in the US and commodities racing away across the board.
 

Some findings from last year, from Bain & Company's 6th Annual Luxury Goods survey. 

• Total luxury goods market 2006 sales growth of 9% over 2005 equaled the percentage growth of 2005 sales over 2004 - which nearly doubled the 5% growth of 2004 over 2003 sales
  
• Growth was spread across all major brands.  Eighty-five percent of companies analyzed reported positive year-over-year sales growth - the highest percentage recorded since the inception of the study in 1999
  
• Accessories (handbags, shoes, etc.) showed the strongest product category growth with a 15% increase over 2005 sales growth, followed by apparel and hard luxury both with 10% year-over-year growth
  
• 'Menswear' over-performed the market and continues to gain a bigger share of the luxury goods market. Sales in the U.S. and Europe generated 95% of the menswear growth
  
• The 9% year-over-year growth was less than the 11% growth reported in the income statements by the 200 luxury goods companies in Bain's 'Luxury Goods Worldwide Market Observatory' database. A key reason for the discrepancy is emerging retail channel leadership, growing 13% over 2005, as compared with the 7% growth achieved in wholesale market growth

• Japan, which represents 13% of the Euro 159Bn luxury goods market, grew at only 1% over 2005 primarily as a result of a weaker currency and stagnating incomes in the second half of 2006

 

The sun'll come out
       Tomorrow
    So ya gotta hang on
    'Til tomorrow
    Come what may
       Tomorrow!
        Tomorrow!
    I love ya
        Tomorrow!
     You're always
     A day
     A way!

the simple answer is reduce prices,introduce special offers,see how the market react,cause i see the nearly new market not shifting either for 2/3 of  price list

bno have more to lose than most brands , certainly in the av world

how on earth are they going to become competitive when everyone else's prices go down and there's go up ??  ?

i'd hate to be in their shoes right now !! 

Concerning the stock price.. Have a look at:

http://finance.yahoo.com/q/bc?s=BOB.CO&t=my&l=on&z=m&q=l&c=

There's a significant drop since last January... but also have a look at the historical price when taking everything into account.

Flappo The Grate:

bno have more to lose than most brands , certainly in the av world

how on earth are they going to become competitive when everyone else's prices go down and there's go up ??  ?

i'd hate to be in their shoes right now !! 

I don't think B&O need to be competitive with mainstream brands Flappo, i think they have just let the whole pricing structure go a bit rhombus shaped!!

Back in the late 90's, an Avant was twice the price of it's nearest rival.  Wow.. TWICE the price - that's brave in any market.  However, the Avant was twice the television, with twice the image quality, twice the design, twice the sound quality (at least) - and discerning buyers were happy to pay twice the price of the nearest rival.

Zoom forward to present day..  the BV7. Around 4-5 times the price of it's nearest rival..  Problem - it's not 4-5 times better.

Bang & Olufsen are between a rock and a hard place, as slashing prices would really hack off the people who had recently paid top dollar.  Aiming at the ultra-high end may be a quick fix, as these people rarely care as long as the label is there. However, if you are trying to elevate the brand to high-fashion amongst the worlds million and billionaires you need to remember fashion has a habit of casting you aside when people get bored!

Only my ramblings...

Lee

 

9 LEE:

Flappo The Grate:

bno have more to lose than most brands , certainly in the av world

how on earth are they going to become competitive when everyone else's prices go down and there's go up ??  ?

i'd hate to be in their shoes right now !! 

I don't think B&O need to be competitive with mainstream brands Flappo, i think they have just let the whole pricing structure go a bit rhombus shaped!!

Back in the late 90's, an Avant was twice the price of it's nearest rival.  Wow.. TWICE the price - that's brave in any market.  However, the Avant was twice the television, with twice the image quality, twice the design, twice the sound quality (at least) - and discerning buyers were happy to pay twice the price of the nearest rival.

Zoom forward to present day..  the BV7. Around 4-5 times the price of it's nearest rival..  Problem - it's not 4-5 times better.

Bang & Olufsen are between a rock and a hard place, as slashing prices would really hack off the people who had recently paid top dollar.  Aiming at the ultra-high end may be a quick fix, as these people rarely care as long as the label is there. However, if you are trying to elevate the brand to high-fashion amongst the worlds million and billionaires you need to remember fashion has a habit of casting you aside when people get bored!

Only my ramblings...

Lee

 

it is now sink or swim for b&o i and many people said it they handled the introduction of digital media badly,they need to reduce price or special offers to attract customers ,price drops happens with all new cars,xbox 360 today £159, last week £260+ ,digital age is different !!! and i think b&o not understood that!!!!!

 

In a reply to what Soundproof said about some people in the segment think that B&O not luxurious enough, I for one concur with that. B&O just seem like a very good arthouse brand but not a luxury brand as compared to brands like Mark Levinson and Wilson Benesch. For the price, B&O should offer a lot more refinement, consumers are very educated nowadays and they want the most bang for their buck. Judging from the radical shifts in consumers' tastes for high fashion goods, they seem to take more notice on details and special fabrication techniques- they are more willing to fork out more money for something that is more luxurious and at the same time more expensive than on something that only looks good at first glance but more affordable.

Many fashion houses are going back to their roots of traditional workmanship and at the same time fusing it with modern improved techniques that are only exclusive to their brands. Like what I previously mentioned in a post a while back, B&O should totally shift away from the crappy aluminum and plastic ensemble to something more exotic and exclusive like fancy wood veneers, leather or ceramics(the current best choice for a brand like B&O) .

Presently, I am facing a dilemma of whether to choose a Beolab 9 with Beocentre 2 or a Wilson Benesch Discovery with separate amplifiers and source as they seem to offer more in terms of quality and outright value despite the fact that the sound quality might not be much of a difference. I mean wilson Benesch offers exotic veneers, CNC machined stainless steel and carbon composite for the same price of the BeoLab 9 for godsake. The reason that I am still half decided is because the B&O system will seem like a more convenient solution. B&O must start to show its customers that they are obsessive about details, not only on the outside but what is in it as well.

How luxurious can brush aluminum be when polished stainless steel is now used on the B&W ipod system?  PS. It will be nice if someone forwards this message to B&O's R&D department. 

I agree, for the price they dare to ask for a 50 inch plasma television, they have to offer so much more!!!

Is there something like B&O Individual that offers the customer additional
choices / options to individualize / personalize their system ?

F.e., if you buy a BMW, you can choose from the standard option list,
but there is also a special division called BMW Individual, that offer the customers
additional choises in finish, materials (steel/wood/leather), colors. 

 

 

9 LEE:

Flappo The Grate:

bno have more to lose than most brands , certainly in the av world

how on earth are they going to become competitive when everyone else's prices go down and there's go up ??  ?

i'd hate to be in their shoes right now !! 

I don't think B&O need to be competitive with mainstream brands Flappo, i think they have just let the whole pricing structure go a bit rhombus shaped!!

Back in the late 90's, an Avant was twice the price of it's nearest rival.  Wow.. TWICE the price - that's brave in any market.  However, the Avant was twice the television, with twice the image quality, twice the design, twice the sound quality (at least) - and discerning buyers were happy to pay twice the price of the nearest rival.

Zoom forward to present day..  the BV7. Around 4-5 times the price of it's nearest rival..  Problem - it's not 4-5 times better.

Bang & Olufsen are between a rock and a hard place, as slashing prices would really hack off the people who had recently paid top dollar.  Aiming at the ultra-high end may be a quick fix, as these people rarely care as long as the label is there. However, if you are trying to elevate the brand to high-fashion amongst the worlds million and billionaires you need to remember fashion has a habit of casting you aside when people get bored!

Only my ramblings...

Lee

 

 

i 100% agree

i bought an avant in 03 as it was worth the extra money , now i'm looking to change the tv in the front room to digital and i just can't find anything in the current range that offers comparable vfm

if the 7-40 was .say £5k , that'd be fair enough , but 8k ?? that's just plain daft 

and as for the bv9 :) 

The same situation here, If A 50 inch B&O plasma costed 3000 euro more then a Pioneer Kuro, maybe the next one would be a B&O plasma. But not now, asking four times the price of a Kuro and a picture quality that is not as good as the worldfamous Kuro. That they have lost me as an always B&O television buyer for 20 years now it their own blame.

wonderfulelectric:

  PS. It will be nice if someone forwards this message to B&O's R&D department. 

I don't think it needs forwarding wonderfulelectric. I'm pretty sure B&O will be following this thread!
Whether they do anything about it though, is a different matter.

Andy T.

I tend to agree with Lee on this one and I am not sure that cutting prices is the answer. I can only help the conversation by mentioning again some of the things that I have mentioned before. The introduction of  flat screens has tested their design capabilities (except at the very top of the range). However if they did what they do do a little bit better then I might still be a purchaser. Why weren't digital tuners possible from the start of the new range of televisions. Its been hanging around in this country for years before I bought my BV6-26 so the technology was well established. Why are they still not available in the DVD2 and HDR range?

I know the arguments about B&O not taking on new technology too quickly but all that happens is that those customers who are loyal (and I no longer count myself as one of them) have to either pay twice or give up on B&O. Not a choice you should be offering loyal customers.

 

 

 

Another problem arrived when the flatpanels came is that from every other manufacturer in the world, the LCD and Plasma televisions became bigger, cheaper and better every year. B&O alsmost never gave something back of that to the costumer and became the big stranger in the AV-branche. A lof of people don't understand that (like me!!) and waved goodbye to B&O. I am in the catergory of people who have no message about luxery, etc.. I just want an outstanding television, with a good sound.

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the simple answer is reduce prices,introduce special offers,see how the market react,cause i see the nearly new market not shifting either for 2/3 of  price list 

-------------------------------------------------------------- 

I don't think B&O need to be competitive with mainstream brands Flappo, i think they have just let the whole pricing structure go a bit rhombus shaped!!

------------------------------------------------------------------------------------

 

My opinion to this:

 

- Bang & Olufsen HAS to be competitve with other brands! Why should I pay 4 times the price for a TV that has a worse(!) picture that another brand.

- Bang & Olufsen HAS to go back to the old HIGH QUALITY of their products.

 

That's what they now paid for! The customers aren't dumb and nobody want's the made in china or made in poland crap.

I demand very high quality from B&O and then their products are good for the price.

But at the moment they're on the way like Bose  etc.: Design, High price, cheap quality.

They HAVE to go back to their roots as there are too many companies with "design" products and often more easy and intuitive operation!

Put a Beosound 3 out of the box and try to set up the time and the alarm WITHOUT the manual and no experience with B&O: VERY complicated!!!

 

 

9 LEE:

As a comparison, how are other high end manufacturers doing on the whole? Wether it be Louis Vuitton, Giorgio Armani, Sunseeker Powerboats, Helicopter Manufacturers, Lear Jet makers, Rolex, Cartier etc etc

It's fine blaming a global economic downturn, but if the others are forging ahead we have a problem!!  Anyone want to have a 'research' and report their findings?

Lee

It seems that many companies were suffering prior to recent events in fact some 18 months ago, but new management within these businesses, particularly in consumer electronics makes them still profitable today in spite of sales weakness in the usa and UK.

The management of B&O were in a dream world where the 'brand was all' losing sight of the market- this is a fate that has beset many companies in all sectors.

Even now, B&O have not reacted quickly enough and I very much doubt the company can stand on its own as it stands presently.