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Gibson To Make Onkyo Investments

1/23/2012 12:01:00 AM Eastern

LAS VEGAS — Musical instrument maker Gibson
Guitar will bring resources to Onkyo USA to step
up marketing, boost customer service, promote the
brand more aggressively to consumers, and enter
into new audio categories, Gibson and Onkyo executives
said.

The executives outlined their plans at International
CES since the announcement that Gibson would acquire
a 51 percent stake in Onkyo USA and become
the second-largest shareholder of Onkyo Corp. in
Japan.

As part of that deal, Onkyo will also invest in Gibson,
and the two companies will form a Hong Kongbased
joint venture focusing on design and development
of consumer audio products.

The deal is expected to close by the end of the
month following regulatory approval in Japan, said
Gibson chairman/CEO Henry Juszkiewicz. Onkyo is
a public company, and Gibson is privately held.

Gibson’s chairman called the Onkyo investment “a
unique opportunity” because of the company’s “exceptional”
technology, “great leadership” and “great
people who are on the same wavelength culturally
with Gibson.”

Gibson had been looking to expand into home audio
“for some time,” Juszkiewicz said. His company
became involved with the Consumer Electronics Association almost seven years ago “in hopes of finding
an appropriate means to enter the market,” he said.

Juszkiewicz called Onkyo a “healthy company”
with a “great brand” that offers “exceptional quality
and features,” but he pointed out that whereas
Onkyo enjoys a leading share in Europe, it “has not
done as well in the U.S.”

Gibson plans accelerate Onkyo’s U.S. share with
a greater marketing spend. “A major area of focus
will be marketing,” he said. “The brands are really
great,” and the company will get the resources to
“tell people how great it is.”

Gibson will also use its resources to increase
Onkyo’s customer service levels, he said. Customer
service is a value-add for a premium brand, and Gibson
hopes to “slowly transition the brand to a premium
brand” that is less price-sensitive, he said.

“The CE business is very price-oriented,” but the
musical instrument business “is not as aggressive
on price,” he noted.

For his part, Onkyo Corp. president/CEO
Munenori Otsuki said Gibson’s investment will
enable the company to diversify into other audiorelated
products. Gibson brings the resources and
a “fresh approach” to make that happen, he said.

Gibson will also bring its “extremely creative”
sprit to a company that is already very innovative,
Juszkiewicz added.

The companies don’t plan to combine sales
forces because “the channels are very different,”
Juszkiewicz said, but Gibson will “introduce Onkyo
to the [musical instruments] channel.” Musical
instruments dealers are open to selling CE, and
“musicians are leading edge consumers” who can
influence others, Juszkiewicz said. The sales gain
“won’t be huge” but will be “a nice adjunct,” he said.

Juszkiewicz also foresaw joint calls on major clients
common to both Gibson and Onkyo. Those
clients include J&R and Best Buy.

Gibson has no plans to create Gibson-branded
home audio, Juszkiewicz said. Onkyo USA’s headquarters
and warehouse will remain in Upper Saddle
River, N.J., he said.

Gibson’s investment in Onkyo is the company’s
second acquisition in two months. In December 2011,
Gibson acquired the Stanton Group, which included
Cerwin Vega! home and pro- audio speakers, KRK Systems
pro-audio speakers and studio-control solutions,
and Stanton DJ, which markets pro DJ equipment.

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