quiksilver...junk bond status

[skategeezer]

from my blog...

It is not a pleasant experience viewing the stock slide of Quiksilver.
This is a HUGE company going through a very difficult time. It's truly scary seeing where the Quik stock wound up yesterday - 88 cents!

On November 3th, the stock was at $2.87.
Yesterday, the company got hit with this:

Moody's downgraded the company's corporate family rating and probability of default rating two notches to "B2" -- a speculative or "junk bond" rating five notches below investment-grade status -- from "Ba3," which is three notches below investment-grade status.

I am not a financial wizard like my friend Jeff Harborough, but the words "junk bond" definitely mean something to me. Junk bond status...yikes.
Let’s rewind to that glorious time back in March of 2005 when Quiksilver bought Rossingnol for $325 million. Here is part of the press release…
Quiksilver Announces Planned Acquisition of the Rossignol Group

Accretive Combination Creates the Number One Outdoor Sports Lifestyle Company Huntington Beach, California, March 22, 2005--Quiksilver, Inc. (NYSE: ZQK) announced an agreement in principle to acquire the Rossignol Group SA (SKIR.PA on Eurolist by Euronext), the world leader in winter sports. The Rossignol Group owns and operates a diversified portfolio of premier brands including Rossignol, Dynastar, Lange and Look in winter sports, as well as Cleveland Golf. The combination of Quiksilver and Rossignol will create the global leader in the outdoor sports lifestyle market. Quiksilver believes the acquisition will be accretive by between $0.04 and $0.06 to
earnings per share in the current fiscal year.

Headquartered in Voiron, France, the Rossignol Group achieved total sales of approximately $625 million for the twelve months ended September 30, 2004. The company’s broad product line includes skis, ski boots and bindings, snowboards, snowboard boots and bindings, and related apparel and accessories, as well as golf clubs and golf apparel and accessories. Quiksilver, Inc. reported revenues of $1.3 billion for its fiscal year ended October 31, 2004.

Robert B. McKnight Jr., Chairman of the Board and Chief Executive Officer of Quiksilver,Inc., commented, “Joining forces with Rossignol allows us to create the number one outdoor sports lifestyle company in the world. Just as Quiksilver is the leader in boardsports, Rossignol leads the winter sports market, and Cleveland is a powerful force in golf. Rossignol’s strong stable of brands is a perfect complement to our portfolio. Furthermore, we both share the same values, culture and philosophies, making this combination that much more compelling. Many opportunities lie ahead, and we look forward to capitalizing on the tremendous synergies that come from this partnership."

"capitalizing on tremendous synergies"

RED FLAG...ALERT! DANGER ZONE!
Things have spiralled to the point that back in August they were offered $147 million for Rossingnol...but then it got worse. In November, they wound up getting rid of Rossignol for $37.5 million in cash and $12.5 million in notes. That adds up to $50 million. That’s almost $100 million LESS than what they thought they were going to get and if my math is correct $275 MILLION LESS THAN WHAT THEY PAID FOR IT.

There has been much speculation about this marriage. Almost 18 months ago, the website 5ones.com nailed it...

I’ve been hearing a lot of rumors and speculations lately that Quiksilver is looking to dump Rossignol, the ski company they purchased in March of ‘05 for just over $300 million. That doesn’t really come as much surprise seeing that Rossignol posted their first loss in 15 years under Quiksilver’s management. Not to mention that Rossignol doesn’t fit into the Quiksilver culture either.

In my opinion, this purchase was never going to be a good fit. Like I just mentioned, Rossignol just isn’t a company that fits into the lifestyle culture of Quiksilver. While they actually make some of the best skis out there, the company’s roots are just too deeply tied into ski racing. If Quiksilver wants to get into the ski game they should acquire a smaller company that’s core in the freestyle sector, someone like Line Skis would be perfect.

Although a much smaller company, Line fits perfectly right in with the action sports lifestyle. The company is breed on freestyle and has been a major factor in the innovation of skiing’s comback since the mid ’90s. They’ve been at the forefront with freestyle ski technology and have consistently sponsored and supported some of the sickest athletes in the industry. And although some years their products weren’t exactly the best constructed, that’s something Quiksilver could bring to the table which would help Line to the next level.

It’s obvious Quiksilver didn’t really understand the industry they were getting into. One doesn’t need to look any further for proof than the $4.8 million loss they posted in comparison to $3.7 million in profit the year before. The ski community would’ve responded better to Quiksilver’s entrance into the sport through a core company like Line and Quiksilver’s culture should never include ski racing.
Sources close in the company are saying that three different offers are on the table for Rossignol. They are also independent rumors that they’ll just dump a few of the companies under Rossignol such as Dynastar, Look and Lange. So what do you think? Should Quiksilver dump Rossignol?</em>

[VANILLA GUERILLA]

Good for them, maybe they'll soon belly up and take Sphincter 9 with them. Natas can go back to art directing porn. And finally I won't have to see all those Zumiez boards for sale on Craigslist anymore. I've never been a fan of Quicksilver ever since Kevin Bacon stared in a movie with the same name. And I don't surf, so so I won't mind not being able to find shirts with a big wave on them for a logo. I wish all these mega corporate company eating greedy guts would belly up and allow the common man to persue his dream once again. If only the rest of these vultures would belly up as well. Flame me all you want, since I only wear Nascar approved, flame retardant, race suits by a company you've never heard of, I won;t feel a thing. Maybe they should buy Heelys or Razor while they're at it.

[DELETED]

Right on, rage against the machine bro

[enemy combatant]

"The company is breed on freestyle"

LOL!!! I bet the guy that wrote that drives a Maserati...

[Brain Smoothie]

thats no good, I love my quicksilver surfboard (of course they don't really mass market those and my mine is the ex NE reps board so its fancy regardless) hope they do alright

[phlyinghigh]

I don't agree with their focus on clothing, but companies like this, even if they do make interior products, have helped bring awareness for board sports and have started many people down the right path.

[skategeezer]

it is a cautionary tale...

[DELETED]

I don't agree with their focus on clothing, but companies like this, even if they do make interior products, have helped bring awareness for board sports and have started many people down the right path.

Most of the money "action sports" retailers make is off of soft goods like shirts, hoodies, etc. Of course, the economy in the crapper so just about everyone is hurting. Consumers don't have the money to spend.

[Trant]

I wish all these mega corporate company eating greedy guts would belly up and allow the common man to persue his dream once again.

Quiksilver was a common man's dream. (or at least, two of them)

Turning silver gold into - In Depth - theage.com.au

I hope they come good.

[Steve Ignorant]

Good for them, maybe they'll soon belly up and take Sphincter 9 with them. Natas can go back to art directing porn. And finally I won't have to see all those Zumiez boards for sale on Craigslist anymore. I've never been a fan of Quicksilver ever since Kevin Bacon stared in a movie with the same name. And I don't surf, so so I won't mind not being able to find shirts with a big wave on them for a logo. I wish all these mega corporate company eating greedy guts would belly up and allow the common man to persue his dream once again. If only the rest of these vultures would belly up as well. Flame me all you want, since I only wear Nascar approved, flame retardant, race suits by a company you've never heard of, I won;t feel a thing. Maybe they should buy Heelys or Razor while they're at it.

Right on brother! Let's go beat up some dykes! ####### #### #### ####!

[fluke]

As much as I've love to say "Oh! A large company is falling and leaving room in the market for the little guys!", it would be naive of me. If the big companies are hurting, then the small ones are going to hurt with them (maybe worse). If, with all the marketing money involved and popular name and exposure, Big Company A can't stay afloat in troubled waters, then Small Company B might drown as well. A large company on a downward spiral is a good clue that demand for something is dying; demand will effect the little guys as well.

[VANILLA GUERILLA]

Although I fully understand where you all are coming from, I don't see why you can't just relax and enjoy the millions of dollars you've acquired and do what every other 59 y.o. does.....golf. Why is it that these large companies feel necessary to attempt to take over other markets....like skiing? I call it the balloon syndrome.....Blowing harder and harder getting bigger and bigger until....pop! Now if I built surf gear I don't see why I would think I can branch out into cereal, or skis for that matter. I know another flame sesh is immanent, and with good reason because who am I and what gives me the right?

As far as the little guys, small companies mean small overhead, and all small companies should be so lucky to grow to be a corporate giant....hopefully those burgeoning skate companies decide against making bicycles or they too might tumble. And seriously, the largest longboard manufacturer Sphintcter 9 was bought up by them and is only expected to account for, what was it?, 3-4% of Quicksilver annual profit? Sickening. And if all goes to hell in a handbasket, those poor 2 individuals who've already amassed billions are still walking away with millions. If they're smart, they might wanna try their hand at toys. I hear toys usually have at least a 400% markup. That'll get them back on track. Hey, better yet, everyone go out and buy some Rossignols so when they sell it off they can make back that 100+ million. And besides, what's 100 million out of billions? I guess for people with more wealth than we all can comprehend, it's no more jets and a refurbished refrigerator stocked with Top Ramen....not.

I say this all in jest my friends. I do feel for them and wish them all the luck in the world. Thank god I'm not trying to start a Surf brand. And if I did and made millions, I'd be too busy counting money to cross the globe looking for companies to take over and burn to dust. My uncle had Rossignol skis once....they had pink in them.

[VANILLA GUERILLA]

As much as I've love to say "Oh! A large company is falling and leaving room in the market for the little guys!", it would be naive of me. If the big companies are hurting, then the small ones are going to hurt with them (maybe worse). If, with all the marketing money involved and popular name and exposure, Big Company A can't stay afloat in troubled waters, then Small Company B might drown as well. A large company on a downward spiral is a good clue that demand for something is dying; demand will effect the little guys as well.

Small companies most likely don't have a board of directors, a team of lawyers, multiple international headquarters, a team of accountants, an I.T. department, and monthly advertising budgets of over a million dollars, so what I mean to say is, the bigger they are, the harder they fall...just ask Donald Trump.

The little guys are carving their own place in the market. By building high quality products, and actually being out there on the floor, hands dirty, building their product themselves. If the they grow and bloat and lose site of what made them, they too will fall.

If their newly acquired company takeovers are losing them 100+ million, did they think buying S9 could help their situation? I'm sure there are, but I've personally never met a person that purchased their second longboard from them.

[sk8norcal]

sphincter 9 was bought by billabong...

back to rant..

Quiksilver, Inc. (NYSE: ZQK), based in Huntington Beach, California, is one of the world's largest manufacturers of surfwear and other boardsport-related equipment. Its logo, inspired by Hokusai's woodcut The Great Wave off Kanagawa[citation needed], consists of a large wave with a mountain on a red background.

The company also markets a line of apparel for young girls and women, under the brand Roxy. Its logo consists of two copies of the Quiksilver logo, one reflected, forming a heart. Quiksilver purchased Skis Rossignol for $560 million in 2005, but is selling Rossignol in 2008 for $147 million.[1] It owned golf-equipment maker Cleveland Golf up until October 31, 2007, when it sold the company to a Japanese sporting goods company.[2]

The company's DC and Hawk brands are also synonymous with the heritage and culture of surfing, skateboarding and snowboarding, and its beach- and water-oriented swimwear brands include Raisins, Radio Fiji and Leilani. The Rossignol, Dynastar, Lange, and LOOK brands are leaders in the alpine ski market, and the Company makes snowboarding equipment under its Rossignol, Dynastar, DC, Roxy, Lib Technologies, Gnu and Bent Metal labels.

Quiksilver also carries a line of high-end apparel and accessories under its QuiksilverEdition brand. In the fall of 2008, Quiksilver will introduce its newest brand, Quiksilver Women's, aimed at the 18 to 24-year-old demographic.

Quiksilver also supports the worldwide boardriding community through its self-titled foundation launched in 2005. The Quiksilver Foundation works to provide environmental, educational, health and youth-related projects to worthy boardriding communities around the globe.

Quiksilver Travel also offers snow and surf travel packages to exotic locations such as Samoa, Peru and Costa Rica.

[VANILLA GUERILLA]

My bad, I thought billabong was quicksilver. All this corporational inbreeding gets confusing and I thought they were now one in the same. But thank god this is a skate forum and not a surf forum so withdraw all of my previous statements. I'm gonna run down to the bank and transfer 275 million over to Quiksilver to get them back on track. Naw, screw that, i'm going skating. Big ups to Quiksilver,roxy,rossignol,lib tech,dc,etc.etc.etc.etc.etc.etc. Sounds like they're in big trouble and I hope they come out with all those other brands you've mentioned. I know a few members on this board that are considering becoming females age 18-24 and I know they all could use more surf gear to skate in.

[Shorty McSmalls]

Although I fully understand where you all are coming from, I don't see why you can't just relax and enjoy the millions of dollars you've acquired and do what every other 59 y.o. does.....golf. Why is it that these large companies feel necessary to attempt to take over other markets....like skiing? I call it the balloon syndrome.....Blowing harder and harder getting bigger and bigger until....pop! Now if I built surf gear I don't see why I would think I can branch out into cereal, or skis for that matter. I know another flame sesh is immanent, and with good reason because who am I and what gives me the right?

As far as the little guys, small companies mean small overhead, and all small companies should be so lucky to grow to be a corporate giant....hopefully those burgeoning skate companies decide against making bicycles or they too might tumble. And seriously, the largest longboard manufacturer Sphintcter 9 was bought up by them and is only expected to account for, what was it?, 3-4% of Quicksilver annual profit? Sickening. And if all goes to hell in a handbasket, those poor 2 individuals who've already amassed billions are still walking away with millions. If they're smart, they might wanna try their hand at toys. I hear toys usually have at least a 400% markup. That'll get them back on track. Hey, better yet, everyone go out and buy some Rossignols so when they sell it off they can make back that 100+ million. And besides, what's 100 million out of billions? I guess for people with more wealth than we all can comprehend, it's no more jets and a refurbished refrigerator stocked with Top Ramen....not.

I say this all in jest my friends. I do feel for them and wish them all the luck in the world. Thank god I'm not trying to start a Surf brand. And if I did and made millions, I'd be too busy counting money to cross the globe looking for companies to take over and burn to dust. My uncle had Rossignol skis once....they had pink in them.

Yet another "core" Sector 9 basher swimming in the Silverfish bowl. You know it all don't ya,buddy!

[enemy combatant]

do what every other 59 y.o. does.....golf.

**** golf. I'd rather skate and surf.

[stephen.mhsrider]

if "sphincter nine" goes under then they wont sell ANY longboards in melbourne. thats how limited our range is.

[VANILLA GUERILLA]

Everyone's so gosh darn serious. Like anything I say will affect anything at all. I'm sorry to ruffle feathers and from now on will go back to agreeing with everything. I thought the mud i slipped in made me the black sheep but since you nice folks have licked me clean I'll step back in line with the rest of the sheep.BAHHHHH

[skategeezer]

as I keep repeating...it is a cautionary tale...

just because you CAN buy stuff (like a ski company) doesn't mean you should.