December 9, 2017
Gun Buying Loses the Fear Factor Under Trump, Sparking Price War
A bad dream for U.S. firearms producers has become reality: The fear-based motivation for gun purchases has evaporated and is being replaced by bargain hunting.
A price war has broken out across the gun industry with no end in sight. Sales and profits are dropping. American Outdoor Brands Corp., the maker of Smith & Wesson weapons, slashed its annual profit target by 45 percent.
“There was some fear-based buying that would take place from time to time. There is no fear-based buying right now,” James Debney, chief executive officer of American Outdoor, said in a conference call. Heavy discounting is “the primary driver for a consumer who wants to acquire a firearm.”
Blame the new business environment on Donald Trump, a self-avowed champion of gun owners and the right to bear arms. Weapons sales often spiked after mass shootings during President Barack Obama’s administration, as some customers fretted that lawmakers would respond with tougher gun-control measures.
Gunmakers aren’t reducing production enough to meet lower demand, and inventories at independent dealers is high, Debney said. He cited competitors offering rebates of $150 on sport rifles, a level of discounting he called unsustainable.
“We have to defend our position and weather the storm — ultimately until there’s a better balance between those production rates and the consumer demand,” he said after the close of regular trading Thursday. It’s unclear how long the discounting will continue, he said.
Shares Tumble
American Outdoor plunged 12 percent to $13.15 at 12:54 p.m. in New York after falling to $12.46, its lowest intraday since April 2015. The stock dropped 29 percent this year through Thursday, while the S&P 500 Index climbed 18 percent. Rival Sturm Ruger & Co. declined as much as 7.8 percent Friday, the most intraday in four months.
American Outdoor slashed its earnings target for the fiscal year through April to a range of 57 cents to 67 cents a share from $1.04 to $1.24, citing the need for price cuts to maintain market share. The Springfield, Massachusetts-based maker of the M&P Shield 9 mm handgun cut its sales goal to $670 million to $675 million. It previously forecast $700 million to $740 million.
“We believe the industry environment will remain difficult for several more months, if not longer,” Chris Krueger, an analyst with Lake Street Capital Markets, said in a note.
A record number of background checks, a proxy for gun purchases, during Black Friday had sparked investor hopes that gun demand had hit bottom. But that holiday buying was merely a sign that consumers were waiting for steep bargains, Debney said. The National Instant Criminal Background Check system dropped 12 percent in November from a year earlier.
Tracking Demand
The industry eventually will match production with gun demand, and the large discounts will diminish, Debney said. Consumers are still driven to buy weapons on concerns over their personal safety, he said. The big unknown: What is the long-term level of demand under an administration that doesn’t spark concern over possible firearm regulation.
“Where do we settle out in terms of the size of the market?” Debney said. “We just don’t know.”
March 7, 2018
Apple Turns Up Audio Ambition With High-End Headphones 0
by MeDaryl • Cars • Tags: ALPHABET INC-CL A, AMAZON.COM INC, apple inc, earnings, INVENTEC CORP, ipad, Japan, PRIMAX ELECTRONICS LTD, SONY CORP, technology, Wireless
Apple Inc.’s AirPods earphones have been a surprise hit. Now, the company is planning a push into the high end of the market.
The Cupertino, California-based technology giant is working on noise-canceling, over-ear headphones that rival headsets from market leaders like Bose and even the company’s own Beats by Dre brand, according to people familiar with the product’s development. The company plans to launch the headphones as early as the end of this year, but has faced development challenges that might push back the release, the people said.
Work on the Apple headset has been on-and-off over the past year. The company encountered similar problems with the HomePod during its development, including multiple redesigns, according to the people. It’s possible Apple will redesign the headphones again before launch, or scrap the project altogether, they warned, asking not to be identified discussing private development work.
An Apple spokesman declined to comment.
The latest plans call for headphones targeting the high-end of the market, replicating Apple’s approach with the $349 HomePod speaker, released earlier this year. In addition to noise-canceling capabilities, Apple plans to include similar wireless pairing functionality to the AirPods, according to the people familiar with the product’s development.
This would be the latest in a long line of music-focused products and services from Apple. The iPod and the iTunes Store revolutionized how music was consumed — as digital downloads rather than physical CDs. The company’s largest ever acquisition was the $3 billion purchase of Beats in 2014 — a deal that got Apple into high-end headphones and music streaming. The HomePod’s sound won glowing reviews this year and Apple is already preparing other audio accessories like upgrades to AirPods that add water-resistance and a new wireless chip that enables “Hey Siri” voice activation.
So far, the AirPods have been a key driver of newfound success for Apple’s Other Products segment. The category, which includes AirPods, Beats headphones, the Apple Watch, Apple TV and iPad accessories, generated more than $5 billion in revenue for the first time in the company’s fiscal first quarter, representing 36 percent year-over-year growth. Within that category, wearable product sales, which include the Watch, AirPods, and Beats headphones, surged 70 percent last year, Apple said on a recent earnings call.
Inventec Corp., the Apple manufacturing partner that builds HomePod speakers and AirPods earphones, may miss out because Apple is likely to work with a different supplier, the people said. Primax Electronics Ltd. and Shin Zu Shing Co., current Apple suppliers, are likely to partner with Apple on the new headphones, KGI Securities analyst Ming-Chi Kuo wrote.
Apple's Other Sales Boom
Other Products category is Apple's fastest growing division thanks to devices like AirPods
Note: Other Products include AirPods, Apple TV, Apple Watch, Beats headphones, accessories.
When the company acquired Beats Music and Beats Electronics in the 2014 deal, Apple executives said the successful Beats by Dre headphones business was one of the drivers.
Apple-branded headphones would seemingly cannibalize Beats headphones, although Beats also sells lower-priced wireless headphones that probably won’t directly compete with the new product. Athlete-oriented wireless Beats earphones still seem to be selling well despite the popularity of AirPods.
Apple previously discarded the Beats Music streaming name when it launched Apple Music in 2015. However, given the strength of the Beats headphone name, the company will likely keep that brand while developing a different new one for the new headphones.
Beats, Bose, Sennheiser, Sony and Skullcandy are the leading players in a headphone market that will generate $20 billion in annual revenue by 2023, nearly doubling this year’s projected sales, according to Research and Markets. Researcher NPD Group said last year that sales of AirPods and Beats headphones gave Apple 27 percent of the wireless headphone market and almost half the dollars spent on the category.
Pricing will be key for the new Apple headphones. The HomePod is priced more than $100 higher than its main voice-activated competition from Sonos, and $200 more than an Amazon Echo, but $50 less than a competing Google Home Max. Beats and Bose both charge $350 for their high-end wireless headphones, while Sennheiser prices range from $100 all the way to $500.
Apple’s cost for each $349 HomePod is $216, resulting in thinner profit margins than typical Apple hardware products, according to TechInsights. AirPods have been tricky to assemble and use unusual design tricks, likely making them expensive to produce. The Apple headphones will likely use similar audio technology, driving up costs.
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Read more: http://www.bloomberg.com/news/articles/2018-03-05/apple-is-said-to-turn-up-audio-ambition-with-high-end-headphones