| Author | Message | ||
     Pogue_mahone |
"Harley’s Bob Klein says his firm wants to discontinue the Buell line rather than sell it, because it’s so deeply engrained in Harley’s business." so............selling off a subsidiary for plus cash flow instead of LOSSES is a good idea? AND being able to supply that same business with parts is a BAD THING???? hd management is CLUELESS. | ||
| Andymnelson |
Go ride. Is that better. Sheesh. (Message edited by andymnelson on October 22, 2009) | ||
| Bromanowski |
That's the cause of all Buells problems right there. "it’s so deeply ingrained in Harley’s business." If they would sell them off and let someone separate them from the Harley sales and distribution system they could succeed and Harley would still make money from parts supply. | ||
| Andymnelson |
That's my point- what everyone misses in this is that all that's leftt is the assets and the IP...and they WILL sell that off, hopefully with more rather than less of the IP. And its time to stop whining about this- HD did us all a favor. (with that said, my hope is that something happens very soon for the sake of the Elves) | ||
| Indy_bueller |
I'm personally hoping for good news on the subject after the first of the year. | ||
| Buewulf |
What Andy said. HD didn't close Buell because they are stupid. They closed buell because it is worth more dead than alive. Write off this year during the bad times, asset sale next year to spruce the statements. It would be great to see Buell rise from the ashes and come out from under the HD umbrella. | ||
| Blake |
"Think about it- the $125m it will cost to shut down Buell gets written off against taxes...ad costs HD nothing." What business school did you attend? That is complete baloney. By that logic, all companies should try to lose money so they can pay less taxes. In basic terms, the corporate tax rate is around 30%, so only 30% of the losses are offset by reduced income tax. In very basic terms, if it costs $100M to kill off Buell, then HDI saves about $30 in taxes. The net effect is a loss of $70M. | ||
| Iamarchangel |
Blake: your principles are right, I suggest corporate tax is lower so the net loss is actually higher. My gut feeling is that this is similar to a GM blunder in 70s involving Novas: the left hand doesn't know what the right is doing. E.g.: imagine a year and a half ago, a HD exec says, "We have a good size kitty, let's capitalize on it.". HDFC says, "Cool, let's use our leverage to push low interest loans and offer job loss protection on the loan. We've got deep pockets. How bad is this recession going to be?" Off they go, without discussing this with anyone. HD Europe says, "Cool, let's buy this nearly defunct company that nobody else is touching and use it to enhance our already good distribution. We've got deep pockets. How bad is this recession going to be?" And, off they go, without discussing this with anyone. This year, the exec looks in horror and says, "Guys, we need to communicate better. Our pockets aren't that deep. The recession will be bad until 2012 and over by 2015." Then he goes into the core values, centralization and streamlining speech. Cash is now limited and committed. Perhaps if they had time to unload MV, Buell could be saved. They don't have time. They have to cut their losses. My belief is that in ten years from now, you'll find a couple of former VPs still cleaning toilets at HD who could tell you the whole story. | ||
| Buewulf |
Blake, the text you quote: "Think about it- the $125m it will cost to shut down Buell gets written off against taxes...ad costs HD nothing." is not from me, but I assume it is meant for my comment since I don't see anyone else eluding to the subject. (Did someone delete a post? Edit: Oh, I see now.) Even though your interpretation wasn't really what I was getting at with my post, I'll counter anyway because I love debate and can't help myself! You mocked: "By that logic, all companies should try to lose money so they can pay less taxes." Plenty of companies try to minimize (though not lose) income on a P&L to reduce taxes, just as individuals often do with deductions on personal tax returns. It's all about the cash flow. Closing Buell, using your example, results in a net loss after tax of $70 million (mostly a non-cash loss transaction), but it also results in more cash on hand in the form of reduced tax liability. Cash is nice to have when access to credit is tight and one needs to ride out a recession. Granted, that practice is much more rare with public companies like HD due to the reactionary emphasis on quarterly earnings reports, but a large, one-time loss like this is classified as an extraordinary event and barely even blinked at by investors. In fact, investors love lines like "we're cutting off the loss makers and getting back to our core business" and will likely see this as a positive move. The thought behind my original post, however, was that they are not flushing $125MM in cash away: the money was spent in the past to build an asset. They are dumping a $125MM asset that continues to earn a negative return. That being the case, it makes financial sense to shut Buell down immediately, and there are a number of smart reasons why even the talk of an asset sale would be held off until a new fiscal. If they are writing off 125MM for a subsidiary that ships 13K bikes a year, then Buell was bleeding money from every orifice. Though the net effect of Buell's Operations on HD was somewhere between small and insignificant, Buell's demise will improve HD's statements going forward while doing little damage in the short-term. It sucks, but I believe that is HD's perspective. (Message edited by Buewulf on October 23, 2009) | ||
| Iamarchangel |
they are not flushing $125MM in cash away: the money was spent in the past to build an asset. They are dumping a $125MM asset that continues to earn a negative return. That being the case, it makes financial sense to shut Buell down immediately, and there are a number of smart reasons why even the talk of an asset sale would be held off until a new fiscal. This is the flip of the coin, isn't it, and HD owns the coin. We, outside and optimistic, say the championship confirmed the asset and sales will go up from here. They say, this is not a credit economy anymore, cash rules and economic principles are changing. Besides, most people will realize that it wasn't HDs engine that won so the HD sales won't really be affected. (Reality: HD's R&D money went to enhance Rotax's bottom line and then KTM's and Bombardier's. It's a mess really.) I wish the coin had landed the other way but I can see why it didn't. | ||
| Buewulf |
"This is the flip of the coin, isn't it, and HD owns the coin." Yup, that is exactly my point: Two sides of the same coin in the same way that Enron stock is as good as the money you bought it with. One side (the cash) is already gone (when you bought), and the other side (investment) has been deemed to have no value. HD is just looking at it as sunk cost. "I wish the coin had landed the other way but I can see why it didn't." Yeah, I think Buell was a diamond in the rough that, had it been properly developed and marketed over the years, would today be a shining star in the HD portfolio. Buell really was at a breakout moment this year with its achievements and Helicon platform. HD just determined Buell's future wasn't bright enough to counter the costs - and under HD's leadership, that probably would have been the case. HD invested a lot of money and built something great, but they just couldn't figure out how to make money with it. What a shame. (Message edited by Buewulf on October 23, 2009) | ||
| Ochoa0042 |
harley is greedy, they dont want others to make more money than they are.. buell was getting up there in the light; and harley saw that, and tucked their tail behind their legs. since buell was making harleys' engines affordable compared to actual harley bikes with all that chrome pizzazz, they are afraid that the market will see right through the shiny stuff to see that it is just 100year old tech that should be more affordable than as advertized. alsdk$&&$ghalk#^%^*;sjalkrhgoi#%7foa&2#!!(d(shvs | ||
| Xoptimizedrsx |
Hd mad the big mistake of only allowing dealers to sell the bike instead of all stores. so if the Hd store was not a dealer and I had cash they lost the sale to a different store. just like every non dealer store on parts. i buy a lot of stuff for parts and have built a bike mostly from parts. all that would of came from a local dealer but they cant and are not even allowed to sell buell parts. which is money out of there pocket. which all went back to the same kitty. they set it up incorrectly. all parts should have been available from any location. just like if i know what bike i wanted and that store didnt carry the buell i could had one transferred there to buy. but it didnt happen that way. what they did was limit the store locations as dealers and only allowed three buell stores in the USA. which were the only places to get clothing and parts from. then each QTR they compared buell sales in accessories and bikes to all the dealers in the firm. so they have 100 stores selling buells and accessories and they have 5000 stores. so the 50/1 ratio was not taken into count at all. if they would of sold parts at all 5000 and clothing sales would of been better. even if parts only was available it would of helped greatly. because some people didnt buy the bikes just because it was hard to get parts locally for them without support. they deal in person not mail order and this was not fair to buell. if you limit a product to a few places only the sales will not grow.it would be like having buell dealers everywhere with only a few selling harley bikes. then not support and having to travel 100 plus miles to get parts or service every time. they too would not have done well. keep buell open allow any Hd store to get parts and to be able to sell and service a bike. this is fair if you count the profits and numbers with all the stores sell the products at all the stores. make the playing field even and run it two more years. then you will see buell will hold its own. | ||
| Pogue_mahone |
opt i agree.very much like any gm dealer can repair/or sell any other gm product,they just go thru the hoops and order the thing the customer wants. hd did it all wrong and any bueller or other person with more than half a brain could have told them that. gotta love the board of director's /vps/whatever they have way of doing things. have ANY of those hd higher ups ever had to deal with hd service with out their title to scare a dealer gm to be sure they are handled right? we do know none of them ever even touched a buell..and are just as out of touch with the buell dealer experience as well. | ||
| Pogue_mahone |
cant ride andy.tires are wasted down to cords. otherwise........ |
