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CES 2012: Gibson To Make Onkyo Investments

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 in their first meeting with the press since the announcement last week
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 Kong-based 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 audio-related 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 MI [musical instruments]
channel.” MI dealers are open to selling consumer electronics, 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 professional DJ
equipment.

At the time, Gibson said the acquisition marked “Gibson’s further
expansion into the pro audio market with loudspeaker, monitor and electronics
technology.”

At the time, Juszkiewicz called
the MI category “inherently limited because people who purchase instruments
also need to know how to play them.” The acquisitions, he said, “expands our
reach to fellow music lovers and allows us access to 20 in 20 consumers instead
of the one in 20 we currently hit.”

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