C-Dale

[Tritonrider]

http://www.bicycleretailer.com/bicycleretailer/headlines/article_display.j sp?vnu_content_id=1804453

I can not believe they ****** the company down the motorcycle hole trying to be Honda. Bill C.

 

[Tom Kunich]

This is the sort of thing that happens when the CEO of a company doesn't have sufficent controls put
on him. The motorcycle division was a boondoggle from the start. By the time they started talking
about building motorcycles the slowest nitwit on the ranch could have told them that the days of
dirt bikes were gone.

Where were the stockholders when the company started talking about motorcycles? Consider -
Cannondale didn't just make good bicycles, they made excellent bicycle clothes, bicycle accessories
and components. Yet when was the last time you saw a new shipment of those seatpacks with the cleat
on them? When was the last time you could find some Cannondale tights?

Here was a company that had a controlling position in the industry and lost their focus.

"TritonRider" <[email protected]> wrote in message
news:[email protected]...
>
http://www.bicycleretailer.com/bicycleretailer/headlines/article_displ ay.j
> sp?vnu_content_id=1804453
>
> I can not believe they ****** the company down the motorcycle hole
trying to be
> Honda. Bill C.

 

[Tritonrider]

>From: "Tom Kunich"

>This is the sort of thing that happens when the CEO of a company doesn't have sufficent controls
>put on him. The motorcycle division was a boondoggle from the start. By the time they started
>talking about building motorcycles the slowest nitwit on the ranch could have told them that the
>days of dirt bikes were gone.

I don't think it was that the days of dirt bikes are gone that did them in. I think it was the "new"
Honda CR all aluminum frame. I think the new frame is about 5 or 6 years old. well within C-Dale's
startup. I think they thought that thier aluminium expertise would carry the bike. Bad call. M/C
world is way too competitive. Waiting for the new KTM streetfighter! (Giant F'ing smile). The thing
has an obscene weight/horsepower/overall size ratio. Bill C.

 

[Bikerecker]

The people I know in the industry, the same ones who gave me the heads up I posted here a few months
back, BTW, say that C-Dale will bust up and the bike division will be sold, most likely to
Litespeed's owner, assuming the debt in the moto division can be handed off. Greg Miller

 

[Howard Kveck]

In article <20030124230510.06358.0000[email protected]>, [email protected] (TritonRider) wrote:

> I don't think it was that the days of dirt bikes are gone that did them in. I think it was the
> "new" Honda CR all aluminum frame. I think the new frame is about 5 or 6 years old. well within
> C-Dale's startup. I think they thought that thier aluminium expertise would carry the bike. Bad
> call. M/C world is way too competitive. Waiting for the new KTM streetfighter! (Giant F'ing
> smile). The thing has an obscene weight/horsepower/overall size ratio. Bill C.

One thing that probably contributed heavily to the problems was the decision to develop their own
engine. They spent tons of cash on that, when they could have just gone to Rotax, given them the
specs they were looking for and sat back to work on the rest of the bike. Rotax has so much
experience in that arena it isn't funny. Going that route -has- to be cheaper than doing it
yourself. Once they got a bike to market, then they could think about doing the engine on their own.
Selling motorcycles at a loss is a pretty bad idea. The KTM you wrote about is very interesting, but
I want to see the sportbike that will be powered by the big bore motor they've been developing (with
Rotax, if I recall). I really wanted to get a KTM Sting from a couple years ago: a scaled down Duke
powered by a 125 two stroke. Not available here in the US of A...

--
tanx, Howard

remove YOUR SHOES to reply, k?

For some people, quantity IS quality...

 

[The Pomeranian]

Bikerecker wrote:
>
> The people I know in the industry, the same ones who gave me the heads up I posted here a few
> months back, BTW, say that C-Dale will bust up and the bike division will be sold, most likely to
> Litespeed's owner, assuming the debt in the moto division can be handed off.

"Cannondale ended its fiscal year last June posting a $15.4 million loss. In the first three months
of its 2003 fiscal year (July through September), the company reported a net loss of $8.4 million--a
rate almost three times faster than all of last year. Last year, the bicycle division generated more
than $134 million in sales, compared to $22 million from motorcycles and ATVs." I'm not a business
person, but they _did_ have sales of $156 mil revenue compared to losses of $15.4 mil. C-dale's
total debt and total assets were not referred to. I would (given the little reported here) not yet
presume a bankruptcy _liquidation_ and I would doubt a pre-bankruptcy sale unless the total debt is
low enough, and the major creditors are rounded up by the potential buyer and they are convinced to
take some fraction of a dollar on a dollar. I sort of doubt this, although I suppose it is possible
if someone wants C-Dale bad enough and doesn't want to have to bid for it in bankruptcy court.

The fact that "Many industry suppliers report that they stopped offering the company credit months
ago, shipping everything C.O.D. only" is a bad sign and I expect a bankruptcy filing. The question
is whether it will be a re-org or liquidation. With decent revenues, a good re-org plan might be
acceptable to the creditors. Perhaps in re-org bankruptcy another motorcycle maker will buy off the
motorcycle division for X pennies on the dollar. At a minimum, it looks like re-org bankruptcy and
the shedding of the motorcycle business. I really doubt a pre-bankruptcy breakup/sale.

 

[Ronde Chimp]

Cannondale to file for bankruptcy

By VeloNews Interactive

This report filed January 27, 2003

The management of Cannondale has announced on Monday that they intend to file a voluntary petition
for reorganization under Chapter 11 of the U.S. Bankruptcy Code on Tuesday, January 28th.

Cannondale and its lenders have agreed to present the bankruptcy court with a tentative agreement,
which would provide the company with interim financing to fund operating expenses and to meet
supplier and employee commitments.

"The interim financing will be used to continue the operation of our bicycle business," said
Cannondale founder and president Joe Montgomery.

Cannondale has also reached an agreement in principle with to sell nearly all of its assets to one
of its two largest creditors, Pegasus Partners. That aagreement, too, is subject to bankruptcy court
approval and could be rejected in favor of higher offers from other parties.

If approved, Pegasus would operate the bicycle business as a going concern with the involvement of
current management and would purchase separately Cannondale's motorsports assets, including the
intellectual property related to the design of Cannondale's motorsports products. In the meantime,
management continues to work with other potential interested buyers for either or both of these
businesses.

Montgomery explained that difficulties with Cannondale's motorsports business made the filing
necessary, and that the company has determined to suspend operations of the motorsports division
pending a potential sale.

"The motorsports division was threatening the bicycle division," Montgomery said. "Although we
believe in the value of our motorsports products, we did not have sufficient financial resources to
make the additional investments necessary. We look forward to bringing a renewed focus to our core
bicycle business and to working through this present challenge with the greatest possible speed."

The suspension of operations of the motorsports division will mean that production workers who had
been furloughed from Cannondale's motorsports factory in Bedford, Pennsylvania in December will not
be recalled.

Production workers at Cannondale's Bedford bicycle factory, who have been idled during a recent
shutdown, are scheduled to return to work in the near future.

Cannondale's foreign subsidiaries are not included in the filing. Business done through Cannondale
subsidiaries in Europe, Japan and Australia accounted for approximately 42 percent of the company's
total sales in fiscal 2002.

One company manager contacted by VeloNews said the company "recognizes the value of our sponsorship
programs," and said he expects those relationships to continue.

"It's a big part of what we do and what makes the bicycle business here a success," the official,
who declined to be identified, said.

Thanks, Ronde Chimp

 

[Stig]

Another ego related mishap?

The bicycle industry in North America has a perverse need to be seen as "all growed up". Witness the
efforts of previously tidy (somewhat anyway) operations trying to get all "corporate" & bring in
outside investors, encourage oddball mergers, & diversify product lines.

Examples, in no particular order are: Fat Chance/Serotta, Schwinn/GT, Bell Sports, Ibis, etc, etc...

The bike biz for the most part is, and and will remain a "cottage industry". The few high dollar
players work on razor thin margins.

This industry needs to tune into and accept its quirky nature & stop trying to "grow up"

Stig

 

[Tom Kunich]

"ronde chimp" <[email protected]> wrote in message
news:[email protected]...
> Cannondale to file for bankruptcy
>
> By VeloNews Interactive
>
> This report filed January 27, 2003
>
> The management of Cannondale has announced on Monday that they
intend
> to file a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code on
> Tuesday, January 28th.

I'll say it again. Cannondale makes excellent bicycles, assessories, clothing and components. The
money they sunk into the motorcycle business would have funded a development program that would have
brought the first complete American group to the market and provided some reasonable competition for
Shimano in the off-road market and Shimano and Campagnolo in the road market. This effort would have
cost less to begin with and could have put them in a position to get strong market share in a
vertical market.

 

[Brian Lafferty]

"Tom Kunich" <[email protected]> wrote in message
news:[email protected]...
> "ronde chimp" <[email protected]> wrote in message
> news:[email protected]...
> > Cannondale to file for bankruptcy
> >
> > By VeloNews Interactive
> >
> > This report filed January 27, 2003
> >
> > The management of Cannondale has announced on Monday that they
> intend
> > to file a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code on
> > Tuesday, January 28th.
>
> I'll say it again. Cannondale makes excellent bicycles, assessories, clothing and components. The
> money they sunk into the motorcycle business would have funded a development program that would
> have brought the first complete American group to the market and provided some reasonable
> competition for Shimano in the off-road market and Shimano and Campagnolo in the road market. This
> effort would have cost less to begin with and could have put them in a position to get strong
> market share in a vertical market.

Clearly, the guys in the Board Room were out partying with Sharon when they made major
decisions. Sharon is lots of fun but NOT a good corporate advisor----except as to
certain fetishes.

So does this mean that Pacific is going to add Cannondale to the GT stable?

Brian Lafferty

 

[Greg Hall]

ronde chimp <[email protected]> wrote in message
news:<[email protected]>...
> Cannondale to file for bankruptcy
>

I was my nomination for Fred Bike of the decade that was the final straw not some lame excuse like
pouring cash into developing a motorcycle.

Greg Hall