Are they really down and out?



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S

Steve Ashmore

Guest
"Carla A-G" <[email protected]> wrote in message news:[email protected]...
> They filed for chapter 11 but they're still going to sponsor a team:
>
> http://www.rainer-wurz.com/eng/news.htm
>
> And apparently they still owe 2002 salaries:
>
> http://www.stiksandstones.com/
>
> - CA-G comfused...
>
> Canadian Girls Kick Ass!
>

Carla Here is a note from the prez. to his bike shops. Of course, he puts some serious spin on it,
but I'm not unloading my bikes just yet.

Ashmore

----- Original Message ----- From: To: Sent: 1/28/2003 2:58:47 PM Subject: A Message From Joe
Montgomery

Dear Cannondale bicycle retailer -

I apologize for having to make this important announcement to you in such an impersonal manner, but
given the number of Cannondale dealers around the world, it is simply impossible for me to speak to
each of you directly.

As you may already know, Cannondale announced yesterday that we plan to file to restructure our
company under Chapter 11 of the Bankruptcy Code, and that we have suspended the operations of our
motorsports division. We took this step in order to facilitate a financial restructuring that will
eliminate the continuing cash drain associated with the motorsports division. While we complete the
restructuring through the Chapter 11 process, our bicycle business will continue to operate without
interruption. In fact, we are servicing warranty issues and shipping bicycles and other cycling
products on a daily basis.

It is critical that you know that our bicycle division is not going out of business. Our goal is to
preserve and strengthen our core bicycle business, so that we can continue to compete successfully
and continue providing you with innovative cycling products, just as we have throughout the duration
of the motorsports project.

For our dealers, our intention is that the filing will hardly be noticed at all. You will deal with
the same account manager, credit manager and in-house dealer service rep. In addition, we have
received a commitment for substantial post-petition financing from our lenders. We expect this
interim financing, which is subject to Court approval, to provide adequate funding for all
obligations incurred after the filing, as well as our ongoing operating needs during the
restructuring process. We look forward to resuming production in our Bedford bicycle facility in the
coming weeks.

We hope that the only difference you'll notice will be an anticipated improvement in our
performance. With our interim financing in place, we're actually in a better position to order parts
from our vendors than we have been in recent months. As a result, we're looking forward to smoothing
out our production and delivery of bicycles. Without the distraction of motorsports, we'll also be
much more focused on bringing new, innovative technologies to market for you to sell.

Our plan for the next several months is to provide you with the best possible support, and to keep
dealer service, customer service and your sales at the highest levels. With your help, we are very
confident that we will be successful and continue to grow Cannondale as an ever-stronger and
ever-more-profitable part of your business.

Many companies that have filed for reorganization - including Harley-Davidson, Macy's, and Toys 'R'
Us - have strengthened their businesses and are performing well today. These success stories shared
a common element, and that is teamwork. With your continued support, we are optimistic that we can
produce similar results.

Thank you for your understanding, and for your help in moving through this challenging period. We
will keep you informed as we go forward.

Sincerely,

Joe Montgomery Founder & President
 
S

Slacker

Guest
"Carla A-G" <[email protected]> wrote in message news:[email protected]...
> They filed for chapter 11 but they're still going to sponsor a team:
>
> http://www.rainer-wurz.com/eng/news.htm
>
> And apparently they still owe 2002 salaries:
>
> http://www.stiksandstones.com/
>
> - CA-G comfused...
>
> Canadian Girls Kick Ass!

Bottom line is they will recover......for how long is the question. Chap 11 only gives them some
time to get their shitte together, so they can continue as a bike company.

C-dale could make a very good argument to the court that the Race Team is absolutely necessary for
future prosperity because many people base opinions (wrongly IMO) on the bikes according to how the
Team does. Plus keep in mind, I'm sure Seimens dished out some big cabbage to play.

Now salaries, those are expendable ;~ (

--
Slacker
 
C

Chris

Guest
Carla A-G" <[email protected]> wrote in message news:[email protected]...
> They filed for chapter 11 but they're still going to sponsor a team:
>
> http://www.rainer-wurz.com/eng/news.htm
>
> And apparently they still owe 2002 salaries:
>
> http://www.stiksandstones.com/
>
> - CA-G comfused...
>
> Canadian Girls Kick Ass!
>
>

I took this from the Rainer-Wurz site:

The Siemens mobile and Cannondale logos will be featured prominently on the race jersey, the three
Cannondale race bikes (the Gemini for downhill, the Jekyll for four-cross and the Scalpel for
cross-country), blah, blah, blah...

Wouldn't it be sweet if, as the release says, they only had the three bikes
:) Like, Tinker wants to run a 24-hour dealie, but the Scalpel is at some
world cup even in Italy...

It does say "the Gemini", "the Scalpel", etc...not "the Scalpel model." It would be awesome if.
under Chap 11, provisions for the team were made, but were so limited they only had three bikes.

Yes, this is a ridiculous premise, but boy howdy, I sure hate C-dale, and any chance to rib 'em is a
good one, in my book.

Chris
 
J

John Morgan

Guest
"Carla A-G" <[email protected]> wrote in message news:[email protected]...
> They filed for chapter 11 but they're still going to sponsor a team:
>
> http://www.rainer-wurz.com/eng/news.htm
>
> And apparently they still owe 2002 salaries:
>
> http://www.stiksandstones.com/
>
> - CA-G comfused...

The local Cannondale sales rep says they are not down and out. They are selling off their moto
division (which was never profitable) and they will continue to go strong with their bicycle
division (which has turned profits every quarter since they started).

They shut down the factory in December, but that was only their production they shut down... they
have continued to ship bikes they have had stockpiled. By next week the production crew will be back
on track, and by June they will be out of bankruptcy (which is really quick... usually takes a year
or two to get out of the funk).

They almost certainly will be a privately held company after they are out of the hole, says I. Back
to grassroots.

-John Morgan
 
R

R.White

Guest
"John Morgan" <[email protected]> wrote in message
news:<[email protected]>...
> "Carla A-G" <[email protected]> wrote in message news:[email protected]...
> > They filed for chapter 11 but they're still going to sponsor a team:
> >
> > http://www.rainer-wurz.com/eng/news.htm
> >
> > And apparently they still owe 2002 salaries:
> >
> > http://www.stiksandstones.com/
> >
> > - CA-G comfused...
>
> The local Cannondale sales rep says they are not down and out. They are selling off their moto
> division (which was never profitable) and they will continue to go strong with their bicycle
> division (which has turned profits every quarter since they started).
>
> They shut down the factory in December, but that was only their production they shut down... they
> have continued to ship bikes they have had stockpiled. By next week the production crew will be
> back on track
<snip>

How long will they work without being paid?
 
C

Carla A-G

Guest
"Chris" <[email protected]> wrote in message
news:[email protected]...
> Wouldn't it be sweet if, as the release says, they only had the three
bikes
> :) Like, Tinker wants to run a 24-hour dealie, but the Scalpel is at some
> world cup even in Italy...

LOL!, Thanks for the giggle!

- CA-G

Canadian Girls Kick Ass!
 
S

Supabonbon

Guest
"Chris" <[email protected]> wrote in message
news:<[email protected]>...
> Carla A-G" <[email protected]> wrote in message news:[email protected]...
> > They filed for chapter 11 but they're still going to sponsor a team:
> >
> > http://www.rainer-wurz.com/eng/news.htm
> >
> > And apparently they still owe 2002 salaries:
> >
> > http://www.stiksandstones.com/
> >
> > - CA-G comfused...
> >
> > Canadian Girls Kick Ass!
> >
> >
>
> I took this from the Rainer-Wurz site:
>
> The Siemens mobile and Cannondale logos will be featured prominently on the race jersey, the three
> Cannondale race bikes (the Gemini for downhill, the Jekyll for four-cross and the Scalpel for
> cross-country), blah, blah, blah...
>
> Wouldn't it be sweet if, as the release says, they only had the three bikes
> :) Like, Tinker wants to run a 24-hour dealie, but the Scalpel is at some
> world cup even in Italy...
>
> It does say "the Gemini", "the Scalpel", etc...not "the Scalpel model." It would be awesome if.
> under Chap 11, provisions for the team were made, but were so limited they only had three bikes.
>
> Yes, this is a ridiculous premise, but boy howdy, I sure hate C-dale, and any chance to rib 'em is
> a good one, in my book.
>
> Chris

3 bicycles, literally! Wow, that's not funny at all. You should lay off the pipe. Why, Boy Howdy,
the hatred of Cannondale? I've never owned one (didn't like how they fit), but they're one of the
few American bike companies who actually put their frames together in the States. And while a some
of their engineering seems more fashionable than functional to me, they're ideas are all
interesting, and some of them are bound to become part of the evolution of performance bicycles (the
oversize BB comes to mind). I think that if the bicycle division does go under it'll leave a
noticeable void in the marketplace. /s
 
T

Tom Purvis

Guest
"John Morgan" <[email protected]> wrote:
> The local Cannondale sales rep says they are not down and out. They are selling off their moto
> division (which was never profitable) and they will continue to go strong with their bicycle
> division (which has turned profits every quarter since they started).
>
> They shut down the factory in December, but that was only their production they shut down... they
> have continued to ship bikes they have had stockpiled. By next week the production crew will be
> back on track, and by June they will be out of bankruptcy (which is really quick... usually takes
> a year or two to get out of the funk).
>
> They almost certainly will be a privately held company after they are out of the hole, says I.
> Back to grassroots.

And they all lived happily ever after...

Pfff.

What do you expect the local Cannondale sales rep going to say? That the company has slightly better
than a snowball's chance in hell to recover? They need to keep their dealers placated.

Bankruptcy filing doesn't erase bad management decisions of the past. It only helps an organization
hold off its creditors while it becomes profitable again.

This is going to cost Cannondale big. Getting into the moto industry was a bad management decision.
They clearly didn't understand that business very well, but they bet the company on it. Did you know
they had a 1 year buyback agreement with people who bought their machines? That is the same as
making a bet that the products would retain lots of their value in the used market.

And these were mega-buck machines. Did they think their reputation as a bicycle builder would
encourage people to pay more for a C-dale moto than they would pay for a Honda? Oh, but we'll buy it
back from you in a year if you aren't satisfied.

If the moto division had any VALUE, it could be sold off for a fair amount of cash which could help
Cannondale come back strong. But if it *had* any value, it would probably have been sold before this
to keep them out of Chapter 11.

The moto division will sell for a fire-sale price IF it sells at all. And then, when C-dale goes
back to the bike business, it's still going to be dealing with an industry that's barely profitable,
even for companies that don't make stupid decisions.

They'll have piles of debt, so they won't have much $$ for R&D. Their standing with parts suppliers
like SRAM, Shimano, and the bazillion small anonymous parts mfg-ers in Asia willl be ****. That
means the terms of all their supply contracts will be harsh. And all the while sales are flat in the
whole industry.

The best hope for the C-dale shareholders is that, once the frigging stoopid moto division is
liquidated, there will be some shred of value left in C-dale, such that they'll be an attractive
acquisition for Trek, Specialized, or even SRAM (or some other industry outfit). Their trade name is
worth something, and they do have some patents and technology that might be valuable to somebody
(like the lefty fork? there's a solution out looking for a problem to solve...)

I think the days of C-dale operating as an independent company are all in the past. The have managed
their way into a deep hole. The only way out I see for them is to have a white knight lower a rope
down to them.
--
Tom "never seen nothin' so sh!t-all stupid in all my born days" Purvis Salida, CO
 
J

John Morgan

Guest
> The best hope for the C-dale shareholders is that, once the frigging stoopid moto division is
> liquidated, there will be some shred of value left in C-dale, such that they'll be an attractive
> acquisition for Trek, Specialized, or even SRAM (or some other industry outfit). Their trade name
> is worth something, and they do have some patents and technology that might be valuable to
> somebody (like the lefty fork? there's a solution out looking for a problem to solve...)
>
> I think the days of C-dale operating as an independent company are all in the past. The have
> managed their way into a deep hole. The only way out I see for them is to have a white knight
> lower a rope down to them.

Perhaps the sales rep was being a little optimistic... he works for the company after all. I still
believe Cannondale will come back strong, though. The reason they branched out into other areas
(wheelchairs, moto, etc.) is because they went public, and the shareholders were demanding that they
diversify their interests. (The "don't put all your eggs in one basket" theory). Every quarter they
needed to report what they were doing. The bottom line became important.

Like you said, in this industry it's very difficult to turn a profit, so I doubt any bike company
out there (Specialized, Trek, etc) has the cash to buy Cannondale. I predict that they will again
become a privately held company, and get back to doing what they do best... making bicycles. The
recovery may not be so easy, and it may not be so quick, but mark my words, Cannondale will
return. =)

With situations like these, I can understand the gut reaction is to assume the worst... but I think
Cannondale is a little more resilient than you give them credit for.

-John Morgan
--
To reply, please remove NOSPAM from the return address.
 
C

Chris

Guest
> Why, Boy Howdy, the hatred of Cannondale?

I've seen more Cdale failures than any other mtb company (not counting bike-shaped toys from stores
ending in -Mart) and thier proprietary parts don't perform in such a way that the sacrifices are
worth it. Imagine if Macs weren't easy to use, and crashed a lot...they would be irrelevant. That's
how I see Cannondale.

>I've never owned one

Smart move, IMO.

> , but they're one of the few American bike companies who actually put their frames together in the
> States. And while a some of their engineering seems more fashionable than functional to me,
> they're ideas are all interesting, and some of them are bound to become part of the evolution of
> performance bicycles (the oversize BB comes to mind). I think that if the bicycle division does go
> under it'll leave a noticeable void in the marketplace.

Yes, any innovation has the potential to be incorporated into a standard, but just like the
fashion/function argument you used, Cdales stuff was way too different, for no good apparent reason.
Though they got some props for the US made/assembled factor, but I took that away when they failed
to write paychecks last week.

Chris
 
J

Jd

Guest
[email protected] (supabonbon) wrote in message
news:<[email protected]>...
> I think that if the bicycle division does go under it'll leave a noticeable void in the
> marketplace.

Yeah, "void" is a good word to use when referring to crappyflail, especially since they have been
selling "void" for so long.

JD
 
P

Peter

Guest
Hey.

Lay off of Cannondale. Their frames are incredible. For me - a 17 year old kid wanting to further my
xc riding abilities with my parents' limited budget, the CDale frame was by far the best in the
<$1000 CDN range. It was the only one made in the States (a key factor). Not some junk frame from
Taiwan put together by a kid with no education (not saying all Taiwanese products are junk, but at
that price, they are). CDale's innovations are also more innovative than the competition. Who else
would have designed a one sided fork? NO ONE.

Where does all of this hatred originate from?

Peter - proud supporter of the American bike... and I'm Canadian...
 
J

John Harlow

Guest
> Lay off of Cannondale. Their frames are incredible. For me - a 17 year old kid wanting to further
> my xc riding abilities with my parents' limited budget, the CDale frame was by far the best in the
> <$1000 CDN range. It
was
> the only one made in the States (a key factor). Not some junk frame from Taiwan put together by a
> kid with no education (not saying all Taiwanese products are junk, but at that price, they are).
> CDale's innovations are also more innovative than the competition. Who else would have designed a
> one sided fork? NO ONE.

No one, eh?

How about Vespa in 1967 http://www.sunpoint.net/~puoskaripekka/images/Vespa/vespavasen.jpg or in
1951? http://www.vespafascination.com/50/specials/htm/51_siluro.htm

Or maybe even in Sunbeam 1893?
http://www.localhistory.scit.wlv.ac.uk/Museum/Transport/bicycles/Sunbeam.htm
 
D

D_d

Guest
John Harlow wrote:

>> Lay off of Cannondale. Their frames are incredible. For me - a 17 year old kid wanting to further
>> my xc riding abilities with my parents' limited budget, the CDale frame was by far the best in
>> the <$1000 CDN range. It
> was
>> the only one made in the States (a key factor). Not some junk frame from Taiwan put together by a
>> kid with no education (not saying all Taiwanese products are junk, but at that price, they are).
>> CDale's innovations are also more innovative than the competition. Who else would have designed a
>> one sided fork? NO ONE.
>
> No one, eh?
>
> How about Vespa in 1967 http://www.sunpoint.net/~puoskaripekka/images/Vespa/vespavasen.jpg or in
> 1951? http://www.vespafascination.com/50/specials/htm/51_siluro.htm
>
> Or maybe even in Sunbeam 1893?
>
http://www.localhistory.scit.wlv.ac.uk/Museum/Transport/bicycles/Sunbeam.htm

Then there is the use one that has a reason for only having one leg.
<http://www.mtbreview.com/reviews/Front_Shock/product_78218.shtml>

--
D_D
 
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