From today's Cleansing Notice (nice turn of phrase, that) issued by Bong:

"... June is a significant trading month for the Company, particularly
in the Northern Hemisphere – achieving the Company s revised EBITDA guidance is dependent on trading conditions not deteriorating further"

Er, um, yeah. OK. Good luck with that.

But wait, there's more.

"[Ted Kunkel] anticipates retiring between Billabong's 2012 Annual General Meeting in October 2012 and the release of its half year profit results in February 2013"

... to spend more time with his family, no doubt.

Risk factors: Billabong's ... brands and Billabong's image are key assets of Billabong. Should the brands or image ... be damaged in any way or lose their market appeal, the Billabong business is likely to be adversely impacted."

D'oh!

Ted Kunkel. What a name! Not as good as Kip Kinkle but reason enough not not to invest in Billabong.

7@ 1.83 + 6@ 1.02 = av. $1.45 per share.

There is your sub 1.50. But will go lower cos many, particularly retail investors, won't wanna pony up the bucks for the pro-rata issue.

Sitting duck for a take-over from Private Equity now, high debt is the only defence against the barbarians. BBG has just done the heavy lifting for them.

instos will buy the 1 buck shares hand over fist, sit and wait for the barbarians to smash down the gate. make a killing.

then the barbarians will load it all up with debt again, take the meat clever to it, and make a killing.

some of the labels will thrive, some will drift off to obscurity.

the waves roll in and keep getting ridin', bigger and better.

circle of life.

Murdoch Press reporting on heads rolling @ BBG.

POT ? KETTLE ?

No, that's Stu Nettle

My best work usually comes from others....that's your line genius

Gee whiz, good news for Ted and Laura - the market loves the deal!!

http://www.theaustralian.com.au/business/opinion/avoid-basket-case-billa...

might even git me'sef some down there, retailers not usually my thing, but hmmmmmm, smash the debt and the div. will crank back up.

PE 4/5/6 ish. ?

Unless the Barbarians get there first.

Priv.Eq is not such an big deal, Quik has been 30% owned by Priv.Eq for a few years.

Betcha Gordon's already got 'em lined up.

As a mate of mine said, there are some good people work at Bong, hope it survives for their sake, Gold Coast familys will suffer if it goes down,or if there are lay offs, not the ceo & top management.

@Sid
Your Fearless Leader must hang on your every word, I see he balefully belched a derogatory comment re your Pot Kettle post.

On another subject...
International Surfing Day... seemed a bit underwhelming
Even a conflict of dates on these links... Any thoughts?

http://www.surfing-day.com/en/default.aspx

http://www.quiksilverwomen.com.au/blog/steph-gilmore-int-surfing-day

everyday is Int. Surf Day !

except this weekend, it's just about to snow in Sid'sville... fresh powder baby.

..."they say time's are tough, we got the best of both worlds here, things are rough, we got the best of both worlds here" - Oils.

Desperate times call for desperate measures. Especially in Billabong's version of the "beach and burb's biz.

But, that does mean it's shitehouse for everyone. Everywhere. As Larry is more than flush enough to buy not only the beaches, but the whole bloody island from Dave.

http://www.slashgear.com/oracle-ceo-larry-ellison-buys-huge-portion-of-p...

In the meantime, the founders and single largest BBG script holders are seemingly just as bad at managing "organic" golf courses.

http://www.noosanews.com.au/story/2011/10/18/new-hope-for-kabi-rena-merc...

Or maybe she's puling back from that course cash drainer as to double down on the BBG penny stock cash raising scheme?

@theroller - thats a harsh call on the golf course management. The woman seems to be dying from a crippling illness. Did you read the whole article?

A quick look at Lanai on Google earth and it seems to be more volcanic wasteland than tropical paradise

International Surfing Day. I wonder why it is in the middle of the southern hemis' winter and is followed the next day by Go Skateboarding Day.

There's a thread in the forums about buying cheap wetsuits OS and shipping them here. Anyone hear (Sid, What) care to venture if Billabong will have big sales to offload stock? Surely hocking inventory is a fast way to raise money.

RipQuikBong have been offering wholesale discounted stock to retailers for 4-5 months. Bong had a big direct to public clearance sale at the Darwin Showgrounds in March when I was in Darwin

Of course RipQuikBong have already shot themselves in the foot by opening their own retail stores in the best areas in opposition to shops who were previously their best Retailers/Stores .. Naturally these store owners who had sold millions of bucks of RipQuikBong over the years, stopped carrying these labels

@d83 - my money's on Ms Tingle demanding a dump-n-cut strategy for the (mainly Billabong-branded) distressed stock pre-Xmas. Billabong's time as an authentic, hard-core surf brand is long gone, and it isn't wanted by the Yoof. As much as she wants or says otherwise, it will be pushed into mainstream oblivion. The barbarians will insist on getting something for the $120M of brand goodwill on the balance sheet.

@TheLostClimber,

'twas just pointing out the randomness of what goes on on this globe. and the stark differences in the world of liquidity.

personally, i only wish Rena the best. and a very speedy recovery.

billabong--------$.093 wtf.

screaming BUY .

all things considered, small volume Stu,

all retail investors were never gunna step up for the new issue, today is their first chance to exit.

Is it just me or do others think that BBG's continued use of AI images in its external correspondence a bit tacky?

def time for a new letter head.

Tacky?

No. They are all brand names.

Which have lost just a bit of the old, steez.

" Lyndie Irons argued in a petition to the Texas courts that the results of the autopsy could blemish Andy’s “brand.”

"According to the petition sent to Judge Wilkinson, Lyndie and her newborn son are financially dependent on the “celebrity of Andy Irons” and “should the autopsy report be released now, Lyndie Irons and her newborn child would suffer immediate and irrevocable harm in that the branding value would be greatly diminished as a result of the news frenzy,”

http://www.courthousenews.com/2010/12/23/32862.htm

http://www.surfermag.com/features/andy-irons-autopsy-results-delayed/

But on the front page of a prospectus?

Mebbe it's a portent....

Oh, the randomness of life on Earth...

It's a big wide world, Stu. So, why would anyone large or small with the crumbs to invest have handed over even more of their pretty green to mgmt for more shares of Billabong, when there are so many other great places to make solid investments?

Especially after this latest round of pure horse.

And NOW, straight away after this seriously dilutive heap of fukall, Gordo Merch is willing to entertain any takeover offers at prices over .90 cents?

Hooyou.

Things must be going swimmingly at the BBG hq.

And never has the term Boong/bung fit quite well as now.

On a second note, if BBG never effects a successful turnaround. Or finds and or accepts a takeover bid at any price,...

the business of surfing in all of it's forms... will find companies willing to participate.... and will go on. And on.

Just as the market for individual company's shares. Or debt. Have done so after Bernard Madoff....

Or Chuck Ponzi.

http://en.wikipedia.org/wiki/Ponzi

All of the neggies can now... Drive thru.

Nevertheless, you just gotta love being diluted. Not.

Apparently Gordon Merchant is currently in Jeffreys Bay, South Africa.

http://www.smh.com.au/business/surf-retailer-needs-a-white-knight-rescue...

That would be the last place I would want to be seeing as it was such a big Billabong town and now hundreds of local workers are out of jobs..

Hopefully it's more bunker than house.

Never know, he might even go the way of a famous mustachioed man in a Berlin bunker.

Maybe Occy, Parko, Taj, Rasta, Egan and Co should start selling off their assets to help out uncle Gordon. What is the odds of that?

getting bought with vengence this arvo,

1.06.

meanwhile zqk slumped to 2.29 overnite.

Gordon working hard away from his bunker?

that's bullshit that 'bong needs a white kinight or PE.

it's now a company with revs circa +1.2 bil and debt of 100 mil.

a position that would be the envy of most listed co's in the current enconomic climes .

Kelly should look a bit closer at the sticker on nose of his board. Every one of his $2.30 zqk shares are carrying 6 bucks of debt.

Talking about tweets, Surfing Life magazine just tweeted a link to the Billabong story. It's the first time I've ever seen an australian magazine acknowledge ANYTHING about the surfing industry. They mustn't be so worried about Billabong's advertising dollars now.

Frankly speaking, a monkey on a unicycle would have managed BBG better than its board these past 5 years or so.

Just sayin'...

Dear Stu Nettles,

Emailing people with the signature block title as the Editor of a Surf Website automatically makes that email non-personal.

Suck on that you fucking dolt.

Ask your lawyer Stu.

You is fucked.

Bye.

You know Stuart Nettles. Exactly. So go clean your underwear. And tell Lionel he's a fucking amateur fuckwit. Come get me bitch. I dare you. Follow my IP's. And call Bob Gerrard too. You all can call me a conspiracy theorist all day... so put your balls on the line and call up your lawyers and ask them to find me.

Ask them to contact The Industry.

Let's see them put up in court.

Bwahahahahahahaha!

You fucking naive little rodents.

Bye some fucking IQ and read the writing on the wall. If what I said was so false... whither the law? Whither the slander?

Bring it.. beyotch.

And ask Steve Shearer about Neil Ridgway.

He knows more than you after tonight.

Myxamatosis?

What on earth is the Wascally Wabbit chewing on now... those So Cal Carrots are so Mind Bendingly Crunchy..

Pussy.

Its late at night in So Cal... BR's been raiding Grandmas Sherry Bottle again..

Ahh, it was only a matter of time.

He probably tried so hard for so long to stay away and then......SNAP!

Everyone has a breaking point !!!!

Hahaha

Good one Stu... appears the Fishy took the Bait... Hook Line & Sinker!

poor 'ol jimmy the dick, drunk medicated insomniac.

whatsup Brewser ? the screaming in you head keeping you up tonite ?

another 48 hrs stint screaming at the screen. ?

winning.

Jeebus! The train wreck gets worse!

Merchant went ON RECORD today admitting that he acted as a shareholder instead of a director when he shot down TPG's deal.

Expect a class action soon.

If he has any coin left to make a suit worthwhile, that is.

Lionel Hutz? Calling Lionel Hutz....

http://www.smartcompany.com.au/entrepreneur-watch/billabong-founder-shou...

But as he's a majority shareholder I don't think there's too much harm in admitting this Whaat.

He isn't going to burn others as he's burning himself in the process.

He's admitted know that it was probably wrong to knock back the initial TPG offer and looking at the current price, it sure was!

Just looks like very poor judgement to me.

Craig, you're being too kind to Gordo. Sections 180,181 and 184 of the Corporations Act set out the pertinent directors' duties. Good faith in the best interests of the corporation and all that.

S180 in particular is a problem: viz. A director or other officer of a corporation who makes a business judgment is taken to meet the requirements [to exercise their powers and discharge their duties with the degree of care and diligence that a reasonable person would exercise] if they make the judgment in good faith for a proper purpose, do not have a material personal interest in the subject matter of the judgment, inform themselves about the subject matter of the judgment to the extent they reasonably believe to be appropriate; and rationally believe that the judgment is in the best interests of the corporation.

As the biggest shareholder AND a director, Gordo had a very fine line to walk. Didn't do it.

Epic fail, Mr Merchant. He knows its true. Said so today. And the barbarians will have their pound of flesh.

Before you masturbate to your little joke about Lionel Hutz Stu... look up where Matt Groening is from and where the Simpson's location was based.

Yeah.

Player, play on...

So, a month or so before the Jbay connie, and a week before Balito, old Gordo Merch is in SA.

Can we now speculate that General Pants is out, And Mr. Price is in?

Oh, and the voices speaking between old rottkamp's bunny ears are obviously back. And in full effect. Again.

methinks 'bong has taken it's lumps and restored it's balance sheet.

methinks quik is now the one in peril, down another 7% overnite to 2.15, 2/half year low.

mmmmm.

Sid me son, you may well be right about Bong.

http://www.totaltrader.com.au/11089/global-prime-billabong-asxbbg-buy-re...

And I may yet be right about Nike

This is outside of my knowledge base, but Credit Suisse seem to have a different opinion:

"Credit Suisse has cut the stock to underperform from neutral, drastically reducing its price guidance to 41 Australian cents a share, describing the company as a high risk investment unsuitable for mainstream investors."

41c!

http://online.wsj.com/article/SB1000142405270230478240457749006355896581...

sidney, what do you know about merchants plastics company ?

Ben, at 41c a share, there'd be a buying frenzy. Private equity firms vs Nike vs Hurley.

Hell, I'd wade in.

Launa would be forced to join Derek, Ted and Allan - she still likes Brand Bong.

The real prizes are the other brands.

victor, not a lot other than it was touted as some sort of biodegradable corn starch type product (I think.). Haven't heard anything about it for quite awhile.

whaaat, that link was the first piece of common sense I've read all week on the topic.

Besides Blasphemy's blurts yesterday, I assume you mean?

"You know Stuart Nettles. Exactly. So go clean your underwear. And tell Lionel he's a fucking amateur fuckwit. Come get me bitch. I dare you. Follow my IP's. And call Bob Gerrard too. You all can call me a conspiracy theorist all day... so put your balls on the line and call up your lawyers and ask them to find me.

Ask them to contact The Industry.

Let's see them put up in court.

Bwahahahahahahaha!

You fucking naive little rodents.

Bye some fucking IQ and read the writing on the wall. If what I said was so false... whither the law? Whither the slander?

Bring it.. beyotch.

And ask Steve Shearer about Neil Ridgway.

He knows more than you after tonight."

Anyone else concerned for the mental wellbeing of the rascally rabbit? I always thought his loopiness was him acting in a Randle McMurphy way, but now I'm not so sure.

does Sprinfield have a resident shrink and could BR get his number from Lionel Hutz ?

Dr Nick Riviera would be a good start.

Or Dr Marvin Monroe.

maybe he could get a referal from Charlie Sheen .

And I keep meaning to ask him how Yasmine Blythe and all the other Baywatch coke whores are travelling/recovering in that Hollywood drug free zone.

BBG - 1.13

Your point being?

point being, if you got yersef some last week, when all the girly front bums were running for the hills,

you'd have made a 20% clip in 7 days.

So you recommend buy?

Like your recommendation last Feb? "anything under 5, tell 'em they're dreaming"

I always said it was a buy under 1.50, the new issue took it under 1.50, and smashed debt.

the fact that 'bong is still expected to make ~100 mil EBITA FY11-12, seems to be lost in the hysterics.

that 5 was relevant for a PE tilt for the number of shares in float at the time, now with double the shares 3+ is fair.

new issue placements happen all the time, that's investing. sometimes you take a bath, that's investing.

pretty sure if you've sold under 2, you'll being feeling very stupid sooner rather than later.

Not from what I can see Victor, has 1.08 from the latest update.

Billabong has a new substantial shareholder - Macquarie Group.

"Macquarie issued a substantial change of notice for Billabong shares on Thursday evening, saying it had taken a 5.8 per cent stake."

http://www.smh.com.au/business/billabong-myer-lead-rally-for-battered-st...

1.17 with the barbarians still lurking under the radar.

why any serious investor would risk cash in this joke of a company is beyond me.

The surf retail industry is had it. The youth are getting more and more fashion conscious, and let's face it, billabong hasn't been cool since the 70s.
They clearly reached market saturation with the bogan/inbred demographic, who will move on to UFC or motocross brands.

Surfers themselves are jack of paying obscene prices for chinese slave labour garments. I'm not friends with a single surfer who wears Billabong apparel, not even boardshorts.

The mouthbreathers have finally realised you don't need to be a walking billboard to be part of the 'tribe'.
The surf apparel industry made it's bed, as the saying goes.

bum A,

True that mate. Heaps better places to invest capital than a company in the shit shape that BBG finds themselves in.

Now, was not every country in existence basically built on not only capital, but on this slanted definition of "slave labour"?

Australia included?

http://mjperry.blogspot.com/2012/05/walter-e-williams-greed-is-good.html

Sign O the Times

The Downgraded Billabong J Bay Pro Webcast is not Online...

Someone didnt pay the Bill Bong?

jbay pro webcast is online,from today onwards.magic waves were had yesterday.

Ah... woke up refreshed after a long dreamless sleep , induced by my newly discovered cure for insomnia... Luke Egans J Bay Commentary...

Meanwhile the Sharks Circle the Carcass of once Mighty Bong...

http://www.caseyweeklycranbourne.com.au/news/national/national/general/s...

old news Sjoe... Adele Fergusson is a financial gossip columnist, barely a journalistic notch above Melissa Doyle on Ch7 Sunrise.

Yes Sid only realised after posting that articles 2 weeks old...

In where is he now
Couple of people were asking re Chappy Jennings whereabouts, Kong recently caught up with the Chapster and heres a pic

https://www.facebook.com/photo.php?fbid=10150910086777343&set=a.14634490...

them 3 guys made Quiksilver. them and Simon Buttonshaw.

For sure Greeny was the structural entrepeneur, and him n Lawro were the ones who put their balls on the line, sometimes taking out 2nd & 3rd mortgages on the family homes.

but Kong Chap and Rab were the human interface for the brand, well before TC and KS11. In fact, I will wager, had this trio been not so effective, then the enterprise may not have become what it is.

Simon was the artistic and creative genius behind echo beach and warpaint.

The rest is history.

But people forget, it didn't come easy.

Didn't come easy for Gordon and his wife too.

Started selling hand made boardies out of the boot of their car.

Seems to be people rubbing their hands with glee at the demise of a mans life work.

I for one aren't one of them.

Where are you now Matthew Perrin? Oh that's right, working damn hard to keep yourself out of jail.

Billabong misses getting Joel Parkinson on near flawless 6 foot J Bay walls this week.

my oh my.

Heath Joske is everyones new favourite surfer.

yew

mmmmm... the corporate world is a hotbed for narcististic phsycopaths to rise to the top, sometimes making it very hard for commonsense to fight it's way through the ass licking patsies and figure in the decision making.

Before the act of reason can be employed, the big swinging dicks have racked up the best part of a $ billion and bought a Rossignol or a shit load too many retail outlets, because patsies will never challenge the executive set. Anyone who does/would, got axed years ago, cos they didn't fit the regime.

They are not alone in aquisitions with nuclear pricetags , RioT/Alcan, Foster's/SouthCorp, spring to mind.

Of course, the banks were just as guilty with the supply of copius quantities of easy crack, but they had another agenda. (And I won't start.)

Sounds like the Drums are beating for Billa Bong
What about all those shop leases they have at Airports trhoughout Aust & Asia... must be costing them a fortune.

Gordon Merchant... a top guy, I remember him telling me and a mate where to sit in the line up at Burleigh as a grom in the 70's, sad to see really, the rocky road ahead for a Gold Coast based company.

As for Perrin, court proceedings so far have exposed the extent of his web of deceit.

That photo of Kong Chapppy & Rabs take you back to a time when the Surf Stars Shined and the Surf Co.s were Booming, everyone wanted to wear the gear...

How the Mighty have Fallen...

ditto ...

http://finance.yahoo.com/echarts?s=ZQK+Interactive#symbol=zqk;range=6m;c...

sid, how many shares would you estimate old baldy owns in quick ?

dunno vic...

(he's probably thinking "too" many.)

According to the AFR (via SMH), TPG has made a second bid for Billabong, offering $1.45 per share.

This is compared to $3.30 per share TPG offered in February.

Ouch.

http://www.smh.com.au/business/tpg-makes-second-bid-for-billabong-201207...

1.45 - tell 'em to go fuck 'em selves.

noticed Colonial & Perenial have already put up their hands to sell to TPG.

who was one of the first substantial holders @ 0.093 post cap raising ???... CBA (ie: Colonial.)

fucken slime bags, probably the same bank that held a good slice of BBGs syndicated debt and demanded the massive cap raising in the first place.

Chinese Walls my fucken bung hole. This was a set up.

Speaking of Takeovers...

Any news on movements re ASP? Lot of shit flying on Twatter at the mo...

so what's new joe ?

(other than Cowboys@4, and Broncos@5.)

Broncs hit hard by injury & suspensions, next few weeks will be tough...
Two man Cows mooing JT & Bowen stay injury free no doubt...

If its of any interest...

Looks like Kelly has agreed to a Skype/Twitter interview with Twitter persona R2T2 @RachelisWINNING and Fred Pawle Thursday US time

With all the usual suspects including BR working themselves into a lather over it

R2T2 is spruiking for Questions for Kelly on Twitte

Questions to be asked include, quote:

"So far u guys want me to ask @kellyslater qs about Sarge, Andy-drug use, Environmental impact ofprosurfing + ASP takeover. Anything else?"

Can we keep these articles on topic?

Our forums are the best place for all of this other stuff. You can start a new thread on anything you want right here: http://www.swellnet.com.au/forums/1/topics/new

Incidentally, Malcolm Maiden from the The Age reckons TGP "should get the deal done" this time.

http://www.theage.com.au/business/is-billabong-paying-price-of-hubris-20...

understood thermalben..

I didnt think its something worthy of a new forum, but point taken.

Was it not due to the failings of current mgmt that Billabong absolutely floundered these past six years?

http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=au%3Abbg...

Was it not the same sorry folks in mgmt responsible for that epic fail the same who recently poached a Target manager with experience in sourcing?.... right around the time sourcing product out of China and other low cost locals is being replaced by a massive return to domestic sourcing/manufacturing?

http://www.foreignpolicy.com/articles/2012/07/17/the_future_of_manufactu...

Yea... It is the same epic fail nozzles who now regret NOT taking the first TPG offer!

http://www.businessspectator.com.au/bs.nsf/Article/billabong-tpg-gordon-...

Clearly the brand name that is Billabong will be in better hands if those paws are those of TPG than those of the epic fail team called current mgmt.

http://en.wikipedia.org/wiki/TPG_Capital

rolls, I could blow holes in a few of your above posts and point out similar retail disasters, but however,

if the BBG board cave in to this current barbarian raid, it will go down as their worst move ever, EVER.

this TPG tilt is low ball and completely defeats the recent cap raising and fails to recognise the subsequent retirement of debt.

1 - 1.2 bil revs can carry 100 mil debt as nothing more than a tax blip, garunteed there will be many others in the cue.

not that billabong needs them, they are in the clear, painful as it was.

TPG can suck balls.

fishie,

Remember when the three dollar offer was presented. and without a speck of due diligence.... not one shred of math to his analysis Gordon Merchant said he would not take less than four bones?....

What do you make of the fact that even old Gordo himself now claims he's sorry he rejected the 3 dollar bid?

Sorry. Does not cut it, bru.

Blowing holes? Has not the mgmt of BBG done that already, mate?

I think the whole industry has now been turned on its ass.....its all about $'s...and the bussiness media has been pretty damming of BBG and its management.

but perhaps the real damage has been in the market place where all the negative publicity,and realisation that BBG has become a retailer,with lots of different brands.....but the people who now run the company are not surfers!

will there be irreversable damage to the brand BBG,as everyone can now see its not a real surf Co......but just a big business,with million dollar management.....and will now possibly be not seen as "cool" anymore???

Qantas has not recovered from its infamous..." shut down all flights"....and Virgin has profitted enormously.....the damage to the brand of Qantas has been a disaster....BBG.....??

brutus,

there have been major long term success. as well a epic failures.

as to "non surfing" people in the biz end of surfing... nothing new there, mate. heaps of other industries have been successfully built and long term operated by people not actively participating in their respetctve industry...

Google the name, Richard "Dick" Baker.

oh, and not all company mgmt are created equal.

same as it ever was.

Stu brah, did you know that rbs morgans has a twitter page?

http://www.rbsmorgans.com/research-and-markets/market-news-and-data/Brea...

rolls, they are not alone.

quik went 16 > 1 (now only just 2.50 juiced up, fret not, their day is nei)

globe went 18 > 30c.

one of our biggest retailers down here Myers, went 4 > 1.50 post Priv. Eq., so what the fuck happened there ?

Most companies that go 30+ years plus have near death experiences at some stage. Rip Curl had theirs, so did Quik, so did BHP, so did RioT... so did... etc

Point is, BBG has taken it's lumps, no need to entertain Priv.Eq now. For meantime it is a company about to post ~100 mil from 1+ bil revs carrying 100mil debt.

So save the hysteria for the next event, which begins with Q.

And Brutus is right, they aren't surf co's, they are fashion retailers, the sooner THEY and everyone else realise it, the sooner they move forward and the sooner surfing will have to learn to stand on it's own 2 feet.

This 10+ bil "industry" derived from surfing mantra is bullshit, pppffffttt, more like 12% surfing / 88% milli vanilli.

here ya go, a WSJ article ben posted a month ago.

http://online.wsj.com/article/SB1000142405270230478240457749006355896581...

credit Suisse suggesting 41c ...???

goes to show they know fuck all.

RBS Morgans eh rolls, that'd be the bailed out/formerly trading insolvent RBS, would it not?

het roller...my point was that in surfing,the cat is out of the bag,in that there has been extensive media covering the demise of BBG as not a good investment for shareholders....one wonders what will be the fallout to the brand,with all the negative media coverage....and will surfers continue to see BBG as a surf brand.

this is the first time in the history of surfing that a public(Surf?) company has been so scrutinised by the world of big business,and will be interesting to see how sell thru sales go in the next month in the Northern summer...all indications are that sales have been poor....so we should know in a month or so the summer result!

as for Dick baker...I actually knew him and was talking to his wife about a month ago,as I stay next door to hin in SC.......not sure what your point was??

anyhow,interesting times as it looks like the big 3 are now not so big and are slowly but surely losing a large share of the market...whats next??

As long as Billabong has got the coin to sponsor surfers then groms and gormless surfers will continue to wear their gear. Disappointing but true. The last budget to be cut will be marketing/sponsorship so Parko, Taj and whoever-the-fuck-else-they-sponsor will keep flying the flag and we'll keep seeing it at the beach.

The vast majority of surfers don't know who Laura Inman is and never heard of Derek O'Neill.

Few comments from one surfie banger, to the other surfie bangers attempting to talk finance. Also a ripe opportunity to vent.

Billabong: The cornerstone brand. I don't think the 8-20 year old kids who wear & buy BBG have their fingers on the corporate pulse, not to mention the back page of the fin. Unlikely their attitudes towards the brand would change as a result of a P/E play (as to be honest, even 90% of their parents have no idea about the economic fundamentals of a corporation)... Their attitudes and spending dollars will change as a result of other means, namely the ability/performance of the BBG marketing team, and the general views of the sport of surfing.

Other Brands: Tigerlilly, Nixon, Von Zipper, Surf Stitch. 99% of the population wouldn't even know Billabong owns these. Doubt this media attention will have any impact on these brands.
Share Price: Man, people just don’t get it. $3.30 per share was for 200m less shares, and a higher anticipated earnings. When you adjust the earnings component of the EBITDA multiples used to value the business, adjust for additional recently raised capital, it’s a comparable bid. The whole ‘egg on the face’ argument, what the fark ... some accounting anomaly fundamentally changes the value of BBG.

Surf Brands & Real Surf Co: Who cares about ‘surf brands’ & what is or not, or the direction BBG tool surfing. Business is business. Riding waves is a sport. Are you guys criticising Swellnet, yep this website, the website we are writing on that has 91,000 Facebook followers and every weekend packs lineups here there and everywhere. Get real.

Anyway vent over. I jumped aboard BBG a month ago @ $1.00. I’ll use the profits I made on that trade to fark off over to Mentawai for a couple weeks and go surfing.

nice move arbus.

truth is majority of punters who buy "surfwear" don't surf, don't read surf mags, and probably rarely, if even occasionally, go to the beach.

being "cool" or "core" through the prism of surfing ...??? that's funny. and totally irrelevant.

Hey Arbus, I think it has been categorically proven by Stu and Freeride that Swellnet does not contribute to crowds in any way, shape or form

why accept the reality of now 4 generations of surfers in the water when you can blame the crowds on BigSURF Inc. and SwellNet ?

don't want crowds ? have a vasectomy .

Go easy on him Sid, he seems like an ok bloke

From one surfie banger to other surfie bangers (whatever the hell one of those is)... if you owned 10 per cent of the BBG stock or 25.8 million shares back in February, the first TPG offer at $3.30 was worth $85.1 million. Then Ted hired Launa and had a $225 million equity raising, which meant that to maintain your position you needed to spend another $22.1 million. You now own 47.9 million shares valued at $69.5 million based on TPG's latest offer price but after deducting the $22.1 million rights payment your stock is really worth $47.4 million. The same position was worth 44 per cent more five months ago.

Hmmmm. Comparable bid, mebbe. Comparable value? Faark orrfff.

Glad you brought up ZQK, sid. Another poorly run outfit with clearly a shite track record of mismanagement.

A dog with fleas still run by the same FUBAR mgmt that should have been replaced a decade ago.

As to this theory that a surf company needs to sell only to surfers, what a load, mates.... Plenty of folks who never play footie, futball, golf, or cricket buy heaps upon heaps of footie, futball, golf, and cricket gear.

And anyone who's claiming that retail currently or previously sucks wind has not bee keeping up with outfits like Cabelas, Monster, Whole Foods and the like.

Again. It is all about the proper people in mgmt..... As well as having the right goods at the right time on offer for people who are free and willing to part with their crumbs.

http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=cab&inst...

http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=MNST&ins...

http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=wfm&inst...

On a second note, was in a Whole Foods market yesterday. Chocked full of health foods... Still, plenty of hefty, unhealthful people shopping in that place.

Thanks for the comments fellas. Few responses for you...

Comment regarding Swellnet was facetious. If they (being Swellnet) didn’t do it, someone else would. What I am saying is I am tired of the whole, ‘corporations shave farked surfing’ mantra that the hippies spin. People on here criticising ‘surf’ companies as corporate giants etc. as they sit on the web, on an exceptionally popular website in their corporate job (just like me). As Michael Franti says, ‘hypocrisy is the greatest luxury’.

Comments from Sid regarding crowds. I don’t personally have a major issue with crowds, the places I surf don’t get that busy and when the waves have any consequence (or it is winter) the crowds aren’t really a big problem.

Comments from Whaat regarding valuation. Save me writing the school lesson but there are quite a few factors impacting valuation. One of these is forecast earnings. The forecast earnings tanked, somewhere between offer one and offer two. Given the bid was based on applying a multiple to forecast earnings naturally, bid two would have reduced. Also, just to counter attack Whaat’s next argument – the bids were indicative, non-binding with a number of conditions – one of these being due diligence. The back of envelope valuation TPG threw at it was based on a forecast EBITDA, and then in due diligence they would’ve realised the earnings were not achievable and the bid adjusted. Does this make sense? I honestly can’t be bothered detailing the other elements as there are quite a few of them.

Cheers

And it's on! Billabong has opened its books to TPG. But they say that the "$695.6 million offer was too low".

http://www.theaustralian.com.au/business/companies/billabong-opens-books...

Yep bang on Ben. I read the announcement just then on ASX. They think it's too low in the context of a change in control situation. This is because controlling a company, is more valuable than not controlling one (i.e. minority stake).

The announcement also says due diligence might take several weeks.

@ airbus-leaker

"Save me writing the school lesson..." Gawd, I wish you would or had.

"... but there are quite a few factors impacting valuation." D'oh!! Really?? I can feel my cholesterol rising as I type. Sucking on eggs will do that to a person.

In any event, you miss my point. Read my posts, from early this year on.

Or not.

Just don't misquote me....

@ Whaaat...

Good pickup!!! I understand your impressive response, you are saying that you didn't learn anything, you already knew there were a number of factors that impact valuation. That's clever "Whaaat" - well done.

I like my eggs poached on toast and sometimes with beans or bacon.

Right class. Sit down and keep quiet, we have a new teacher.......

... a mind so fine that no idea could violate it

'a mind so fine that no idea could violate it' T.S. Eliot ... I can only assume the literal meaning 'Whaat'. Thankyou!

Good piece of DD, arbus-lessker.

Oh, and here's a link to the full article, ben.

http://www.marketwatch.com/story/billabong-opens-books-to-tpg-but-says-b...

Selling half of the Nixon biz. Paying down debt. Closing underperforming retail locations...

Bong is clearly up for sale.

Only two things left.

Agreeing on a price. Which should come in a few cents above the current offer....

And inducting BBG's mgmt into the long term, surf industry faceplant hall of shame. ;-)

The newspaper said the private equity was unfair to announce the takeover both times, before bong. Altho' legal, it's a nasty loophole to use, dirty tricks.

this current TPG raid is utter bullshit.

Colonial (CBA) & Perenial's postion fully stinks, and a perfect example of why you should not give your $$$ to fund managers. It's usually these very instos and superfunds that lend the shares to the short sellers for their CFDs and other assorted vulture trickery.

existing shareholders have paid off the bulk of debt via the placement and stock price response to the dilution.

No way TPG should be now handed the keys or even let in the building.

anyone who can't recognise this deserves to be fleeced.

If BBG's mgmt had not utterly FUBAR'ed their biz, Texas Pacific Group would have never been in the position to come knocking, and make a low ball bid, 'eh Sid?

On a second note, there's nothing wrong with short selling. In fact, short selling is good!

http://www.ft.com/intl/cms/s/0/cb22ac84-3cdb-11e0-bbff-00144feabdc0.html...

so tell me Rolls, what was the point of the Cap Raising if they are gunna cave into the barbarians now . ?

short selling turbo destroys share price value if a Cap Raising is required cos it causes more shares to be issued to source the same amount of funds. a double whammy of pain for common stock holders and often a fatal blow for the enterprise itself.

and it's done in the shadow's by slime bags who don't own the shares in the first palce, or in concert with a predator in waiting.

no doubt this has been the case here.

sid,

Did you ever see the film Blazing Saddles?

To me, the raising of additional fundage was as an attempt by BBG's mgmt as serious harumphing. Board of directors included.

Is it the fault of short sellers, (or TPG for that matter), that their business ended up in the septic tank. And the resultant share price of BBG traded hands recently at .92 centavos?

Or is it the fault of BBG's mgmt? And BOD?

Tell us. What's the percentage loss of a stock that in five years goes from $16.00... To a buck and change?

http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=au%3Abbg...

rolls, no idea what harumphing is.

yes, it is absolutely the fault of short sellers that the stock hit 92c, and that the placement was set at 1.02 requiring hugely larger new issuance to achieve the funds.

from memory the shorts (er sorry, the CFDs, we don't have naked shorting in Aust, cough.) had it choked at ~1.72, even when the first TPG tilt came in at 3.30 .

the stock got knee capped and the vultures and hyenas set to the wounded beast.

seen it all before. the ol' lets drop it 40% at a time and keep setting off the margin calls, the death spiral is put in motion and becomes self perpetuating. just ask Lehmann Bros.

@ sidthefish,

Over the last 5 years, the share price of BBG did not "get knee capped" as you call it,.. (more prudent investors would refer to it as the sanctity of math_,.... have lost 95% of it's value because of random people placing short positions.

Similar to a kick me sign, these facts are fully tatooed to the backs of BBG's mgmt.

http://www.cato.org/event.php?eventid=6986

rolls, you got anything else besides stating the obvious and youtoob clips ?

random short positions ? nothing random here, it was one of the most shorted on the ASX . fact. fully orchestrated concert by men in the shadows.

happens all the time. 1001 co's in the same boat right now. don't be a naive fool and think otherwise.

I've got no vested interest in BBG, thought about gettin some if it went under 1.50, but never made a move, it's not my thing. Regardless, I've seen this play before too many times, and it was bludgeoned forsure.

and rolls, here's a quick link back to RBS, I'll bet this wasn't on their twitter page...

http://www.guardian.co.uk/business/2012/jul/29/rbs-libor-scandal-stephen...

Sid.

Sure looks like the shorts were right. And did a better job of DD than some others.... BBG's mgmt could have made other decisions, the biz could have gone in the other direction, and the shorts would have lost heaps.

Who's responsible for the serious under performance of the fundamentals of their biz? Who do you really think deserves the blame for this?

http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=au%3Abbg...

Why do you think that many share-moulders may be just a bit adverse to trusting BBG's mgmt and board of directors to turn around the ship, mate?

rolls, again. stating the obvious. blah blah blah. woulda, coulda, shoulda.

I'm offering an insight into the mechanics of a stock smack down.

It's not as straight forward as some people may think.

Now, tell me again how BBG mgmt fucked up and give us another youtoob clip.

Either way, the TPG deal still sucks.

sids,

those type of folks who cling to conspiracy theories aside,...

blaming the short sellers is always a wrongheaded and typical technique used by some. designed to take eyes off the real reason shares of BBG have lost 95% of their value over the last 5 years.

http://www.bloomberg.com/news/2011-12-18/billabong-slumps-by-record-afte...

you may not like the offer. as clearly you are emotionally fixated on your losses. and stuck sucking major air...

but, who do you think remaining sharemoulders trust to turn this sinking ship around. so that the brand name BBG can compete with the likes of Target.

current mgmt?

or TPG.

rolls, haven't lost a cent on this stock.

Priv Eq mgmt, hmmmm, have a look into 1 of our main TV stations down here Ch9, see how they are going.

ditto, Myer prior & post P Eq.

then show me were Rhone has markedly improved Quiks performance since becoming 30% owner / 3 seats on the board.

BBG still expected EBITDA is ~80 mil . you'll know in a few weeks.

you're the one sucking air, and your insider trading pedigree is lit up like new years fire works on the harbour bridge.

now, give me another yootoob clip, or an out of date news bulletin and tell me the bloody obvious, just for a change.

Here's a good explication of the situation by someone whose opinion is worth noting. No offence meant to anyone here....

http://www.eurekareport.com.au/article/2012/7/30/shares/boiling-point-bi...

If you can't get through the link, here's the full text of Tom Elliot's article from yesterday.

Private equity group TPG has come back and made another bid, of sorts, for Billabong – but there’s substantial risk involved. It’s still conditional upon due diligence, which Billabong has granted, and the offer of $1.45 a share could be revised up or down.

The Billabong board has said the offer is too low at $1.45, however TPG has already bought a stake of 14.5% from two fund managers. Now, this is not an unconditional purchase – instead, what it has done is essentially buy an option over the stake with agreements to split some of the upside in the event TPG lifts its bid or another bidder emerges. It’s a way of kicking the company into play, but allowing the fund managers to retain some of the upside.

The original bid at $3.30 a share earlier this year valued the company at about $850 million, and the new bid at $1.45 puts it a bit under $700 million because the capital raising put a lot of new shares in the mix. So in terms of equity market cap it’s about 20% less than the original bid.

The stock closed at $1.365 today, and that’s firstly because due diligence might reveal things have worsened and cut the price, and secondly because the board’s rejecting it and TPG could still walk away. Whether this bid will go ahead is hard to say, but it will come down to a battle between the new CEO Launa Inman versus shareholders just taking the money and running.

It’s possible other private equity firms could be interested, but given TPG made the first bid and is following up now I’d say it’s unlikely. Another retailer could, but I doubt it. Most retailers have a tough enough job at the moment that they’re not really in a position to be buying each other.

I think it will ultimately go ahead, but if it does it will have to be at a slightly higher price. At the moment we don’t even have a proper bid on the table, so this is risky. And one of my rules is that you should be happy to own a stock in the absence of a bid, and I’m not sure that’s the case with Billabong at the moment.

The board’s on shaky ground here, though one positive is the capital raising has paid down a lot of debt so Billabong’s not under immediate balance sheet pressure. It’s going to come down to whether Billabong can convince the market it’d be better off backing the board’s strategy – and, let’s be honest, the board hasn’t exactly covered itself in glory here.

It’s good news if you took up shares at $1.02 in the raising – you’ve got an instant profit on them, and if I’d taken up a lot at $1.02 I’d be inclined to sell. 30% in a few weeks is pretty good.

whaaat, the original 3.30 bid valued bong @ 850 mil.

the current 1.45 bid values it @ 700 mil, even tho' bong is carrying ~400 mil LESS debt than at the time of the first bid.

No argument about the math from me, Sid. If I have a beef, it's with the Board for getting the company - being its employees and shareholders - into this sorry predicament.

As for getting crook with the barbarians: in my view, it's a lot like asking the sharks to ignore a bleeding fish. Fine sentiments, but not worth the breath to utter them, cause it will never happen.

@sid, Ouik still has the same mgmt that ran them in the shitehose. even with Rhone's semi white knight money. and that selling of half of the crown jewel, most profitable biz, Nixon, by BBG's mgmt lead to the offer being lowered seems about right.

oh, and comparing a tele station to BBG's epic failures is moot.

@whaaaat,

thanks for the link and full text.... good to see that Tom Elliot and I are in agreement with the due diligence.

somewhere, 500 odd mil has gone west in the second TPG deal.

sure, bong fucked up, paid the price, got punished, took their medicine and heads rolled.

why lay down a die now ? makes no sense to me.

"Billabong’s not under immediate balance sheet pressure. It’s going to come down to whether Billabong can convince the market it’d be better off backing the board’s strategy"

Same as it ever was. August 24 is D-day.

Out if interest, at what point is a company's debt considered 'normal', 'ok', 'acceptable' etc?

BBG's debt is currently $100 million, although was more than three times this amount a few weeks ago. A couple of years back, Quik's debt was over $1 billion (although it's now down to about $700m?).

As a small business owner, these kinds of figures are pretty hard to fathom.

Ben, it's a good question. Betting the present on the future is as old as money itself. But Alan Kohler in today's Business Spectator explains how Bong is caught in the middle of a perfect storm. Some of Kohler's notable quotes.

"The world is in the grip of a drought in confidence and a bubble in safety.

...

Risk is off because the future has turned opaque. Potential returns from risking one’s money in a low-growth world are no longer enough – it is not simply a matter of low confidence, but reality of low growth and heightened risk.

...

Mining projects in Australia are being cancelled because investors aren’t really interested and boards can’t persuade them to be. Money might have to be given back to the owners, God forbid.

...

The greatest consequence of the bubble in safety is that there is a global shortage of consumption and a result that is that there are now few, if any, industries that are growing.

Retailing certainly is not, and nor is banking because, as discussed above, borrowing is at a crawl. Media is going backwards, energy is at standstill because of the confusion about climate change and a sudden, unexpected, glut of oil and gas in America. Mining is past its peak.

Only the health business is growing because we are all taking longer to die. But human repairs are largely paid for by taxes and since the retirement age is now roughly halfway through the average working life, there are as many people absorbing the taxes than are paying them.

How did all this come about? Because for 30 years or so, consumption was financed by debt, something encouraged by politicians and central bankers pushing cheap money. A generation of bankers and borrowers discovered the glories of leverage in 80s before coming unstuck in 1990, and then a new generation reinvented leverage after 2000, before once again coming unstuck.

...

Leverage upon leverage upon leverage, until finally the world is exhausted and there are no more bubbles in risk; only a bubble in safety and a deficit of consumption."

Good times.

Hey Ben. There isn't a hard and fast 'normal' figure. An appropriate level is dependant mainly on two things:

1. Ability of the business to pay debts (i.e. current & forecast earnings relative to debt size)

2. Covenants set by the bank (i.e. loan to value ratio, interest cover ratio etc.)

The bit some people miss, is that 1. and 2. are interdependent. I.e. If the forecast earnings tank, then generally the equity component (i.e. market cap of a listed business) will tank with it. As such with lower expected earnings you might still be able to afford the interest repayments, but the bank (as a secured creditor) can still pull the pin as you've breached the 'rules' in 2.

A higher risk business (i.e. technology companies) generally maintain lower debt levels, than say a manufacturing business with an established customer base.

There are industry norms for debt/valuation etc. for businesses, but I think that's the bit you were looking for.

Does that help?

Hey Ben. There isn't a hard and fast 'normal' figure. An appropriate level is dependant mainly on two things:

1. Ability of the business to pay debts (i.e. current & forecast earnings relative to debt size)

2. Covenants set by the bank (i.e. loan to value ratio, interest cover ratio etc.)

The bit some people miss, is that 1. and 2. are interdependent. I.e. If the forecast earnings tank, then generally the equity component (i.e. market cap of a listed business) will tank with it. As such with lower expected earnings you might still be able to afford the interest repayments, but the bank (as a secured creditor) can still pull the pin as you've breached the 'rules' in 2.

A higher risk business (i.e. technology companies) generally maintain lower debt levels, than say a manufacturing business with an established customer base.

There are industry norms for debt/valuation etc. for businesses, but I think that's the bit you were looking for.

Does that help?

Ben, there a a number of metrix that can be use to gauge debt.

It needs not be said ad nauseum, that 'bong fucked up, but I said it again just for Rolls. (sorry, got no yootoob clip or news bulletin from december to offer.)

So lets stop living in the past and look at the new paradigm of bongs' balance sheet. I reckon most co's will kill for it in the current economy.

In round figures, by my cowboy calculus, it goes like this...

Revenue : ~1,000 mil

Debt : ~100 mil

Interest coverage : ~100 mil @ ~10% = 10 mil/p.a.

Can 1,000 mil revs support 10 mil interest ? ...

piece of piss. it's no more than a tax blip.

People need to stop flapping their titts.

Arbus, important point you just raised.

Don't think bong was ever at risk of not covering interest on their debt, more breaching their bankers covenants re: market capital/debt .

The bankers were always pulling the strings.

Thanks fellas, that clears quite a few things up. What an awfully scary world some businesses work in!

as soon as "breaching bank covenants" got mentioned and the death spiral was put in motion, it became self full-filling prophecy.

the rest is history.

Billabong was never in danger of "going broke", it was simply spit roasted by the banks and short sellers.

Spot on, Sid.

Sure.

It was all the bankers and short sellers fault. BBG's mis-mgmt has nothing to do with BBG's epic fail.

Trust. But verify.

http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=au%3Abbg...

rolls, I'll try and be polite here.

really don't want or need TO AGAIN point out Billabongs failings, that is fully recognised, fully documented in the tape.

This thread has evolved beyond the bleeding obvious. Myself and a few others have tried to offer an explanation, in our best laymans terms, as to how such predicaments unfold due to factors such as bank covenants and market forces, for those who care to consider this angle, or get a handle on events.

It's not some moral judgement necessarily, simply an acknowledge of their existance. Right or wrong, is for each to decide. I have my view, you have yours, but don't deny they exist.

They are as real as insider trading, AREN'T THEY ROLLS. Manipulation, wolf pack shorting, daisy chains, etc, etc, all real.

Now please, if you've got nothing new to offer, shut the fuck up.

Enough of your conspiracy theories, Sids. Obviously your suggestion is for all share-molders to stick with the very same mgmt that FUBAR'd the company to the point where they are now.

Pardon me for disagreeing with this epic fail of a strategy.

Good luck to you.

it's not the same management Rolls.

heads have rolled and no doubt more changes are underway.

at least try to keep up to speed.

Your perspective has been acknowledged, ad nauseum, no-one is disputing the epic fail.

really don't know what more you want, or what more you have to add on the topic.

I'll stick my neck out here.

On a human and personal level, beyond the 'evil' corporate they/he deserve to die fuckers die mantra.

I haven't been aligned with Billabong since I used to sweep out the original factory at Hibiscus Ave on a friday arvo after school for a pair of boardies or a singlet. My allegiances ended up elsewhere... 'nother story.

But what I will say, is that Gordon Merchant is a sincere, passionate and creative person, as is Rena.

Over the years I've seen his loyalty and caring applied from Joe Engel to Occ to AI. Sometimes the right thing to do would have been to let them go. But he didn't, he stuck by them.

Then I've seen Him/Billabong support guys like Margo or Rasta, who are both alternate individuals in their own way, and just let them be themselves. Or Munga, or Butto back then. Or taken Rab onboard after Rab and Greeny had bumped heads one too many times. Or someone who finally covered Bushy Mitchell, after he had toiled for thankless decades as the godfather of Queensland surfing. And all the other lives that were supported by his tenacity.

That's all I've got to say about that.

Those are nice stories. Siddy. Loads of compassion and the lot. But you are calling up examples of those brand name blokes who are the basis of BBG's stick stirring the swill bucket....

Standout in the adverts.

Now, tell us, how many "regular" people were given the sack because of BBG's mgmt epic fail?

Earth to sidthefish.... Share-molders only care about the bottom line.

As do BBG's bankers.

I haven't personally checked this date, but I'm told this weeks Country Road -Witchery deal was actually less favourable from a valuation perspective than the second TPG bid for Billabong. Can anyone share on this?

Rolls, you've really got fuck all, and sound like you've borrowed someone's handbag.

My lastpoint was corporate aside.

the surf companies aren't evil and didn't destroy anyone, they created them.

regardless of the current anti "industry" movement, my personal exprience is that the culture doesn't support or tolerate assholes and in most cases the people involved are generous, genuine and owe the world fuck all.

I know each of the big 3 founders, plus many more down the line, and on a personal human level would have a beer with them (most) any day.

it's easy to hate success or bag failure, but I'll tell you what for free, having a go is tougher than it looks (just ask Dane Reynolds.) Guess I've just got the hair on my balls to say so.

now go fuck yourself rolls, you're boring.

Are you saying the hollywood handbag was right? ... For some reason, fully due to BBG's mgmt and BOD, shares ended up trading at penny stock prices.

No matter what you say siddie, BBG has a very long and painful road to hoe. No guarantees in this very competitive sector that BBG gets back to the 40 oz of freedom they used to enjoy.

C'mon, give it a rest, willya Roller? Bong's strategy since 2007 hasn't been at all smart, and execution's been even worse: it's paid top dollar for retail businesses and leases just as the consumption binge peaked. Trying to keep all the plates - new and old - spinning took time, mental energy and management focus away from strengthening its core. And Andy's death was a stunning blow.

In previous, 'normal', times, Bong could've made necessary changes without taking the savage beating that the stock has taken in the past 25 months. Its balance sheet wasn't great but Bong was hardly in terminal mode. Still isn't.

But the market has never given a sucker an even break. I'd bet Perrin never told Merchant about the down side of playing in the shark tank - Perrin probably didn't even know about it, given the many gaps in his knowledge base.

This is a tragedy, whatever else it may be. No one deserves to have their dreams and life's work end up the play thing of bankers and speculators.

Design, marketing, wholesale and retail never sleeps, Whaaat. Same goes for banking, speculating, and trading in shares..

AI forever.....

but don't you think BBG's mgmt and BOD have earned and deserves slightly less time than that?

Like Sid said....

What Mossimo and OP were to the 90's... BBG is to the 2000's...

http://en.wikipedia.org/wiki/Mossimo

http://en.wikipedia.org/wiki/Ocean_Pacific

http://en.wikipedia.org/wiki/Iconix_Brand_Group

Only thing left for the brand name that was Billabong is for share-molders to pick a pack of mgmt that's more suited to lowering costs. And flogging licensing agreements to licensees, and togs to Walmart.

http://www.walmart.com/browse/apparel/5438/?_refineresult=true&facet=bra...

Or Target.

It's over, Johnny.

Not much happening re: TPG yet, but Launa Inman's suggested that 85 more stores will be closed (they initially said 150; now 235).

http://www.brisbanetimes.com.au/business/billabong-tpg-talks-progress-20...

Hi All.
Have read through the thread since the beginning. Not sure what you are on about roller. Everyone seems to have acknowledged your point of view... repeatedly. Why not acknowledge the wisdom expressed by others in their opinions instead of repeating your veiw over and over.
Nothing personal, just an observation.

Rat,

The wisdom of mine or others opinions are just that. Opinions. That mean nothing.

What matters is the opinions and actions of management.

http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=au%3Abbg...

Embrace The Horror.

Rollsy.
Incorrect.
Your opinions do mean something. As does the opinion of anyone else. What you are not acknowledging is that a statement of opinion may or may not be correct in regards to facts or substantial evidence.
Your opinion has been acknowledged by some as correct (factual) and others have added to your opinions as a means of expounding upon the value of the facts presented.
This is something i would personaly like to see you also acknowledge either with a different opinion or the same one. Instead you repeat your earlier opinion (facts) which is tiresome and irrelevant as the converstion has moved on from those initial musings.
Again, nothing personal, just an observation.
I think i might have posted this proverb before but perhaps you might have missed it.
"Teach a wise man and he becomes even wiser. Teach a fool and you get a kick in the shins."

I've never heard Confucius better quoted...

rat race,

Laura Inman herself told you what is up.....

"Transformation Strategy".

And, no matter who it is that ends up controlling the BBG brand FUBAR'ed by mgmt, ..... they are in the thick of fixing a very leaky canoe.

It is not clear at this point if BBG will never hear surf music again....

But, it think it's clear. We'll never see $16 again.

http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=au%3Abbg...

And with that I rest my case and shall go and nurse my wounds.
http://3.bp.blogspot.com/-rVaW8QGDFmE/T0sKPTtfR4I/AAAAAAAACfQ/pAQRqaLXcP...

Did you get burned by BBG Management the-roller or are you this passionate on all stocks that tank on the ASX?

I remember at the time 'bong was buying up retail chains, (particularly those West 64 ?or whatever they are called? USA stores) I was thinking that these are already distressed assets.

IE: they where major BBG accounts, struggling, and bought up in a defacto recievership type deal spun as aquistions. That was my reading between the lines.

Traditional wholesalers who move into retail chew off one of their own legs in some ways. Same with them running 2nds stores.

I also reckon bricks n mortar retailers who move heavily into online sales, again chew off another limb defeating their bricks n mortar presence which then needs to be unwound by, I'll take a stab, near 70% their number of stores if their online assault is definitively successful.

@arbus,

Mate. Just participating in the old fact and comment.

Carry on.

Stu, Mr Romney started the firm way back in 1984. And left Bain capital around 2001.

As to BBG, it sure looks like this is a done deal with the current operators at Bain!

@sid, What do you thunk of this quote from one of the many spruikers out there?

"We are just basically waiting and if someone buys it for A$1.45, we'll get an extra 9 cents. It's a nothing investment now," said Beddow.

http://in.reuters.com/article/2012/09/06/us-billabong-offer-idINBRE88502...

Rolls, you defend Mr Romney like only an insider knows how.

"Mr" eh ? nice touch Rolls.

I'd like Mr Romney and Ted to get together and have a love child.

Mitt Kunkel.

Nice.

Not defending anyone. Just some facts, Sids. And since i don't know the guy, just the publicly available info, would me calling him Mitt or sir, make any difference as to these facts?

Now, back to BBG?... How's it hanging, mate?

Have you ever thought it would have been more advantageous to invest with Romney and co than with BBG's mgnt? As his firm did pull down consistent returns of over 20% per year. For something like 20 years?

I did.

what rolls, ya only pulled +20% pa. insider trading ?

that's disgraceful, forget the SEC, you should be reported to the Insider Traders Assoc. as AN EPIC FAIL.

ps. all that dosh and you get to hang out with us convicts.

way to go champ.

Sid, funny stuff!

With his statement "it's a nothing investment", how many shares do you think this Beddow fellow, and the corporation he apparently works for, may have picked up while shaking the tree filled with disappointed sharemolders?

Arbitrage comes in all shapes and sizes i guess.

Speaking of champs, how brill were our Supreme court members when they ruled that corporations are people too?

Stu,

with your latest FB report that the owners of Rip have now put themselves up for sale, similar to us punters of BBG, i'm guessing the Rip Curl folks wished they'd done so back in 2006.

even so, whatever the company fetches, guessing the Rip guys canoe will still be far larger than mine..... as i'm rolling with an second hand surf mat i picked up from a Geo Grennough jumble sale.

Interesting - the mystery second bidder for Billabong has pulled out.

http://www.smh.com.au/business/second-billabong-bidder-pulls-out-2012092...

Yep, I think Bain worked out that 'Bong's product development and R&D functions are, well, just not functioning. Certainly not enough to justify a price much above $1.15 or so.

http://www.smh.com.au/business/suitor-balks-at-billabong-20120920-2689h....

And unlike, say, DJs, Bong doesn't have hidden assets such as off-balance sheet CBD properties.

So much for this punditry.

http://www.totaltrader.com.au/11651/bbgasx-billabong-limited-bain-capita...

Stock market forecasting sounds harder than weather forecasting. I recall the currency forecasts mid-2011 (after the record peak near $1.10).. most of them said the Aussie dollar would slide and then level out at 80-90c into 2012. It dipped down to the mid 90's a couple of times but has generally remained above parity.

Ben, picking stocks can be hard enough, but at least you can meet the Board and check out the executive staff, look at the numbers, decide whether the strategy makes sense, talk to the customers etc etc.

Forex, though, is almost entirely random.

Waaat,

Thanks for the linked article.

Some classic quotes in there.

"A single-buyer auction is about the worst place for any seller — particularly if the asset is a dilapidated business".

As to Forex, currency bettors are notorious for being strictly traders. who rely predominately on technical analysis.

And technical analysis exists solely to make astrology look valid.

Billabong's share price has plummeted upon rumours TPG have pulled their bid. It's currently down 24c today, sitting at $1.08.

http://www.smh.com.au/business/billabong-plunges-on-tpg-withdrawal-repor...

This just in the AFR.

http://afr.com/p/business/companies/tpg_reconsiders_its_billabong_bid_Y7...

"...It is understood the forecast and weakness of Billabong’s core brand have caused TPG to doubt its ability to turn the business around."

Looks like Billabong have announced a replacement for Ted Kunkel - Ian Pollard, formerly of the Just Group.

http://www.smh.com.au/business/billabong-names-ian-pollard-as-chairman-2...

Wow. "The Australian Shareholders Association has recommended that Billabong founder, Gordon Merchant and Colette Paul be dumped"...

.. says an update of that article from just 20mins ago. And how's this additional line:

"The ASA said it also seriously considered whether executive director, Paul Naude, also be dumped."

http://www.smh.com.au/business/billabong-founder-should-be-dumped-asa-20...

What a train wreck. The damage to Bong's authenticity (as the main brand) is so deep and the need for something - anything to drive serious cashflow (and therefore buy time to retire debt AND get the other brands up and firing) is so strong. Put this together with two key people who don't have surfing in their DNA (but do have contacts in the mainstream ragtrading retail sector), the terminal damage to Gordon's credibility (not to mention the potential shareholder class action and/or ASIC investigation), and ravening institutional shareholders who just want to get the stock price up to a level where it can be jettisoned without losing their jobs.

As the Idiot Bunny implored - join the dots. Hard to see how Billabong (the brand, not the company) can be now kept from being sold (out) into mainstream stores.

Billabong - coming to a Target/Myer/Grace Bros/David Jones/Nordstrum/Debenhams/Selfridges store near you, real soon.

BBG bumped up just a couple of cents today. I take it that means the reception was cool to the news?

Who can read the mind of the trading room boys and girls? And very light volume traded.

But how's this for a quote "... in the event that Billabong continues as a publicly listed company"!!!

http://www.theaustralian.com.au/business/companies/billabong-warns-tpg-i...

A share buyback on the cards?

looks like the market priced in the possibility of the deal not going ahead, tpg hasn't said they are pulling out just firing a few across the bow.

Only one bidder, making noise about not going ahead, price falls, TPG offers 1.20 insto's cut their losses and run.

business, nothing personal ya know?

BBG share price is now down to 99c (52-week low is 93c).

Isn't the $1 mark some kind of psychological barrier? It's certainly been described that way in relation to currency exchange rates.

Not really Ben. The most critical equation to determine a share's value is its Price/Earnings ratio (P/E).

On this basis, a couple of analysts I respect seem to like an underlying price per share of around .80c to .86c.

@ Whaat. P/E ratio is the endpoint of a valuation as demonstrated by the market capitalisation, divided by the earnings. There are a number of factors that go into a valuation above & beyond a P/E that the analysts factor in their own valuation models. Naturally, these are reflected in the market capitalisation.

@ Ben. I would say there is definitely some psychology in it. Investors are price sensitive & at times act in packs. Also when a price drops, it can trigger peoples automatic sell orders, and then in order to meet the orders they are forced to sell at the next rate a buyer is lined up.

If you are interested do some googling on behavioural finance/economics. It’s quite interesting.

@a-l

I've always wondered what goes into valuation models that isn't in the public domain. Somewhat like the dark arts. Care to shed any light on what us punters don't get to see?

Or speculate on why TPG are taking sooooo long and staying soooo schtumm?

It's only public domain information in my experience (although I'm not an analyst so can't say). That said they would go to all investor presentations, read all reports, & be aware of all announcements. Something your average punter doesn't have time to do!!

I do think the analysts at times get exposure through one on one calls with the CFO's/Senior Management etc. but I think you can usually find transcripts of these calls. It's generally nothing new, just clarification or the analysts fishing for a little bit extra info (in BBG's case for store closures etc.).

Analysts then use this information along with their views on long term growth, competitor trading multiples, industry outlooks etc. to come up with a couple of valuations of their own (using different methods, by which they cross check). They then compare this with the trading value and that's the basis for their buy/sell/hold & target recommendations.

ALL that said. So often they have completely different views - one says buy the other sells sell. So it's of limited value. As you can see now, http://www.billabongbiz.com/phoenix.zhtml?c=154279&p=irol-estimates 1 Analyst says buy, 1 says sell, 7 say hold.

That help at all @ Whaat?

Re TPG taking so long. I guess the simple answer is it's a big investment. Doing your due diligence on buying a house is hard enough, imagine buying out a large business & working out how you would turn it around. I think that's why they are taking a while.

That & it could be some malicious strategy to low ball the bid. Not too sure on that one.

@a-l

Ah. Less surfing, more reading.

Nah.

But thanks for the response, much appreciated.

Re: "some malicious strategy to low ball the bid"? Wouldn't put it past them. After the 2011/12 results, they'd be smarting from getting the $3.30 offer so wrong. Ego can be a dirty word.

LIke all the ruined banks from the GFC the question to ask is where has all the money gone? Some off-shore islands that's where and I'm not talking ones with cranking waves. Pity the mum and dad investors that got burnt here and elsewhere.

Share price is down to 85c. Ouch.

Given that Quiksilver is now running professional surfing, what did you expect?

Huh?

You might have heard that one of the directors of Quiksilver is now responsible for the media and advertising rights of professional surfing

No, your statement suggests the reason for the drop in Billabong's shareprice was because of the recent agreement between ZoeSea Media and ASP International.

Other than that though TD, your conspiracy theories are really starting to bore.

I wonder what's gonna happen to the sponsored surfers and all of the billabong events now.

Malcolm Maiden's written a fascinating piece in the SMH which goes into a little more detail about the bigger picture. I thought this was interesting:

"By the time Inman's plan was announced, Billabong was offering consumers more than 25,000 clothing styles, each in various sizes and colours, and 22 per cent of them generated 80 per cent of its sales. Inman said she would cull the weakest 15 per cent.

It had no less than 500 suppliers, but 19 per cent of them were the source of 85 per cent of Billabong's sales. Inman said about 175 of them would be let go. It runs a dozen retail chains, but generates 80 per cent of its sales from just 11 per cent of its customer base. The knife will be wielded heavily there, too."

http://www.smh.com.au/business/billabong-facing-heavy-weather-after-tpg-...

This is a textbook case of brand (mis)management. A brand is a promise, not simply a logo. Billabong's promise was authentic surf clobber that real surfers wanted to use and wear. Gordon could keep the promise when it was just his company. It became impossible to keep the moment the company was floated. Too many other promises had to be made to too many people who didn't understand or, if they did, didn't give a shit about keeping the only promise that mattered. Growth and ROI at all costs, and damn the consequences. What does the company have of any value if not brand goodwill? It doesn't own real property, any manufacturing p&e or even any intellectual property. Ask Coca Cola about New Coke in 1985. You can't break a core promise and expect nothing bad to happen. The only hope for Gordon is that he (perhaps with other surfers' help and money) can buy back the farm before it's sold off, either piecemeal or by Billabong-branded stock being dumped into mainstream retail stores at the insistence of its institutional shareholders, or both. Ironically, if the share price keeps on its current trajectory, he may just get the chance at a buyback, but he's probably too tired and too close to retirement to want to do it all again.

It's a fucking very sad story....

Ne'er a truer word spoken.

A very sad story indeed.

Zen, yup. it is bit sad. But, Surf companies come. And surf companies go.

and BBG has on offer something like 25,000 clothing styles?

Yow!

Interesting to note. Daynolds who's little site has on offer a few towels, tees, and beer cozzies. Is more profitable than Billabong!

Note to BBG. and the rest...

The art of Competition will never end.

You can call me a conspiracy theorist if you wish, although occasionally giving me some evidence which proves me wrong may be helpful. But I digress.
Billabong vote to give ZoSea (with it's strong Quiksilver connections) the media rights and a few days later TPG withdraw it's offer.
Nobody anywhere, including every market analyst, can work out why.
This either means Billabong is seriously in deep shit beyond anyone's wildest dreams or TPG weren't happy that such a vote was taking place and was particularly not happy with the way Bong voted.

Actually TD, someone mentioned the exact same thing on the Realsurf forums a short while ago. And Nick Carroll answered it really well. Here's some of what he wrote:

"When you rank it (Billabong voting to give ZoSea the media rights) against the real business concerns of that company, it's a pretty small thing. The franchisees will play the ball dead on the subject of media rights. "They were never ours anyway, we were just acting on them as part of our temporary event franchise." Would not have appeared on any balance sheet as an asset of any kind. As mentioned elsewhere, the 2009 franchise deal valued those rights at $65,000 per event, based on the prize money increase the franchisees provided in return for the use of the rights."

Is that enough evidence to prove that TPG didn't abandon a year's worth of due diligence on Billabong just because the ASP sold the media rights to ZoSea?

A few points. 1. It's taken as a given that Billabong voted to give ZoSea the deal. I don't think this is clear. I haven't seen the numbers, but 50% of the votes would have come from the surfers themselves, so providing it wasn't necessary to achieve a unanimous result, Quik's votes would have probably been enough to get the deal over the line.
2. However, assuming it did, a sound reason for that may be the pressing need to get back to its core business - selling stuff. Licences are not IP, so they weren't assets on Billabong's balance sheet, merely recurring liabilities. Even if TPG knew about the deal, which would be improbable, I doubt it would be fazed about it, at all.
3. I think the real, core issue is the growing pressure on Billabong's margin in sales. There are basically only two ways to make it in retailing: sell stuff that people will pay absolutely anything to have (you want the early adopters - those who camp outside of Apple stores to be the first to buy the latest iThing - they kick off the demand cycle) or cut prices. I estimate that Billabong-branded stuff is 50% or more of the company's sales. The brand is so mature and its product range and offer is so dated that, for example, even the people who buy knock-offs in Thailand and Bali don't want it. The genuine Billabong stuff is under real margin pressure - punters don't want to pay full price for it, so the only way to move it is to cut prices. The other brands in its stable don't yet generate enough sales volume to pick up the slack. And the wise heads around the board table sold off 50% of the real star in the brand stable, with the biggest growth potential and the best fit for an on-line business model.

You may be right about the conspiracy theory. But there are better, simpler explanations for why TPG packed up and left. Don't forget, too, that Bain did the same thing a few weeks ago, well before the ZoSea deal was made.

Sorry, last thing. Inman's recovery strategy is based around taking costs and waste out of the business, not on new, critically wanted product. So the company may return to profitability, but I suspect it will be on a drastically reduced revenue base. That's not the sort of business TPG could tart up and flog at a profit in a 3 to 5 year timeframe.

I've ot a bit of a theory on all of this....surfing is a very technical sport,and one of the hardest if not th hardest learn,90% technique,10% look
The surfing culture is exteremely healthy,where ever you go ,car parks are full,nice cars in the lot,everyones got good bds and wetsuits,I Phones etc......

our so called surfbrands have become 90% so called surf fashion,which is average quality at high prices and 10% technical substance.

the surf industry has been living off and growing by selling away from their core market for years,intill you see generation Y has not bought into mum and dads era,and they are not relating to the big bussiness,branding and marketing of soooo many products,or ant product that can be branded and sold for a $

the marketing formulas that have gotten the company's to where are they are from a turnover point of view....is just more is better,and in doing so they have bastardised their own brands,so when you go to the footy now...its BBG/QS/RC......as mass market brands.....

how many kids do you know that are ist or second generation ,who are saving up for a an industry cool T- shirt?

they still buy the wetsuits .......but from what I have seen travelling a fair bit these last 6 months...the support has collapsed for the fashion side....the mega bucks have been made by a few,and the legacy oy the current surf Co's is little chance for gen Y to have a carreer path in any of these Co's ....there is genuine concern within the surf Co's from the kids inwondering will they have a job this week..

Its been coming for a long time and now its plain for all to see,you just can't turn around a brand and make it cool again........but you can go to the supermarkets as has been the cycle ...as Golden breed,Hang Ten,O P.....have had o do ,because they did the same thing...went beyond their surf culture and lost their core,and the rest is history....

whats sad is that the legacy of the current companys is/was one of greed/egos is what we are seeing now.....no job security,surfers will have reduced contracts,juniors will have less uport as the bean counters come in and try and make the Co's profitable,for profits sake because thats what a public company's first and foremost goal is to make money for its shareholders.....even privarely owned RC is all about making $'s for the owners..and thats why its for sale...they know the writing is on the wall in that their surf fashion is dead....try and get something for it now because as the lack of sales bites.....if you don't have new technical product and have the same marketing formula.......

you get the same result as now...all the creative,innovative parts of surfing have not been mirrored in the brands.......so the cycle c ontinues...

as for the ASP deal.....couldn't have happened at a better time is 20 years over due,breaking down the self /vested interests of the Co's on the board.....will lead to surfing becoming more mainstream and there will be new surf Co's springing up.......
its a damn shame surfing never had an Yvon Chouinard and company like Patagonia to be proud of.....but with the fall of the current surf Co's.....there will be a creative movement to establish credible surf co's that represent ...simply ...surfing....bring it on!!!!

Thanks for that Ben. Although I don't look at the realsurf forums too often, I'll go over and look it up.
I guess my point is it may well have been the straw that broke the camels back.
TPG have pulled out and haven't stated a vaild reason.
They haven't even modified their offer down.
Basically there must be something behind the scenes at odds with all the other information out there in the public domain ie annual reports, financial statements, statements from the CEO etc.
How does the average mum and dad shareholder feel about this?
Are Bong purposely misleading the public with their financial statements?
Or is it just TPG sensed no real future for the company at any price?
The future for the sale of surf wear is China and southern India.
Most reports on ZoSea suggest all the sponsors were in agreement to hand the control over to them.
I think ZoSea will inevitably favour Quiksilver in the future.
If Bong did this while knowing Peal Speaker was a director of ZoSea then they have no grounds for complaint if ZoSea favour Quik in the future.
If Bong voted that way, it is basically a last ditch, sink or swim type of manouvre.
I'll put $5 on it that if there ever is a WT event in China or southern India while ZoSea are in charge, it will be sponsored by Quiksilver.
I think with the handing over of media rights by Bong to one of it's major competitors it is a death knell for them if ever there was one...and TPG know it

"This EITHER means:
1. Billabong is seriously in deep shit beyond anyone's wildest dreams; or
2. TPG weren't happy that such a vote was taking place and was particularly not happy with the way Bong voted."

Dunno about shit beyond anyone's wildest dreams but its very possible there's enough shit to make TPG re-think $1.40, which is a completely different proposition.

This from Michael Benet in today's Oz.

BILLABONG shares remained under pressure today after analysts speculated that private equity giant TPG pulled its $695 million bid for the surf, skate and snow wear retailer because of concerns around the health of its core brand and the operating leases for its retail network.

After a six month-plus pursuit of Billabong, TPG on Friday officially withdrew its potential $1.45 a share takeover play, sending the target’s shares down almost 17 per cent. TPG’s exit after a six-week due diligence process came after Bain Capital also withdrew, raising concerns about what the private equity firms uncovered and didn’t like.

Craig Woolford, an analyst at Citi, said the two biggest issues were likely to be the underlying health of the Billabong brand and a sales decline in Europe, which makes up 18 per cent of the group’s sales.

“The fact that TPG spent six weeks looking at the business and felt proceeding with a takeover was not worthwhile is a concern. Bain Capital only took one week to reach the same conclusion,” he told clients in a note.

“Fundamentally, we expect concern was raised about visibility for future earnings. We cannot rule out other issues such as excess inventory, future liabilities around contingent earn-outs on acquisitions or lease liabilities.”

JPMorgan’s well-rated analyst Shaun Cousins, who had long touted the risk TPG would pull its bid following due diligence, agreed “brand equity” would have been a concern after industry players raised concerns to the investment bank about the brands’ performance.

He added retail performance and possible constraints on the ability to improve operations may have worried TPG, with the detail of the operating leases for Billabong’s retail network likely to have been of “significant interest”.

“This would be necessary if TPG were looking to reduce the number of stores, a sound strategy in our view given the vast network contributed to the poor execution of the Billabong retail growth strategy,” he said.

In early trade, Billabong fell to a low of 82.5 cents, before rising 0.5c to 84c in a flat broader market.

Credit Suisse today reinitiated coverage of Billabong with a ‘sell’ recommendation and a target price of 41c.

In addition, Mr Cousins said TPG may have uncovered problems in the retailer’s systems issues, with “information and financial reporting systems have long been an area of concern, in terms of quality, quantity and timeliness of information”.

“The risk exists that the systems themselves were a concern to TPG, or that the nature of the systems made it difficult for TPG to make sound assessments of the performance of Billabong (brand performance, retail stores performance, country performance),” he said.

“While there is the risk that the withdrawal could be gamesmanship on the part of TPG, with a possible return once further costs are reduced, stores are closed, or risk reduced, at this time we believe on balance it is likely to be a complete withdrawal.”

While Billabong on Friday reiterated its guidance of full-year 2013 underlying earnings before interest, tax, depreciation and amortisation of $100-$110m, UBS analysts said TPG’s withdrawal “places doubt” around its medium term forecasts of ebitda growing to $210m in 2016.

“These are plausible opportunities given a lack of focus on operational effectiveness for many years. However, we expect a decline in sales to partially offset the earnings opportunity,” said Mr Woolford.

“We are also cautious about the company's execution on these initiatives and believe brand investment will also be required as an offset to the stated earnings opportunity.”

Nah....

I think I'll take Option 2: Conspiracy Theories, thank you, Mr Harwood.

“These are plausible opportunities given a lack of focus on operational effectiveness for many years. However, we expect a decline in sales to partially offset the earnings opportunity,” said Mr Woolford.
“We are also cautious about the company's execution on these initiatives and believe brand investment will also be required as an offset to the stated earnings opportunity.”

I think those two statements clear things up for everybody.

Who is Mr Harwood Whaaaat?

A tip: don't drink and post, you'll just end up looking like a total idiot.

I still reckon first WT comp on China will be sponsored by Quiksilver, call me a conspiracy theorist all you want

TD, using your analogy then, if Billabong suffered as a result of the ZoSea/ASP deal - by way of TPG pulling out and BBG's share price subsequently dropping - then surely the opposite effect must have been felt at Quiksilver's end.

That is, Quiksilver's share price should have increased following the news of the ZoSea/ASP deal.

However, that hasn't happened: since September 7th (the last noticeble kick in ZQK's price, up 50c), a quick eyeball of ZQK's share price shows that it's weakened slightly overall, with no major trend either way following October 5th (the day the deal was announced).

Also, you're a little late to the party re: Quiksilver and China. January this year saw the 'ISA China Cup 2012 presented by Quiksilver' (also known as the 'The Hainan Wanning Riyuewan Bay International Surfing Festival Presented by Quiksilver). Quiksilver have been doing their legwork in China for some time - I recall Phil Jarrat writing an article for ASB Mag on this very topic a short while ago (I'll see if I can find which issue).

@d’Turd Burden

Ah, thanks for sharing. If the advice came from anyone other than you, I might take pause for thought.

As things stand, though, I’m as likely to take it as I am to perform a personal appendectomy.

Time and time again you come up with an absurd conclusion from a cobbled-together concoction of half-truths, conjecture and addled musings, then demand that the rest of us ignore the bleeding obvious and take your feeble prognostications as fact.

Or you seize on a statement made in thread by, say, Greg Webber, and hold it up triumphantly to prove some half-baked theory about director’s duties or corporate governance that you kinda almost sort-of grasp from the night school class you attended once.

Only you see the devil’s handiwork where in fact there’s only human failing and grasping incompetence to blame. Ironic but unsurprising in someone who’s the Inspector Clouseau of surfing, without the comic timing. Your sagacity is exceeded only by your IQ. (That’s not a compliment by the way.)

Now. Go fuck yourself. As you were.

Billabong announced at today's AGM that they're going to close another 140 stores by the end of the financial year.

http://www.smh.com.au/business/agm-season/billabong-founder-survives-cal...

By any definition, Bong's 2011/12 result was gruesome:

Net loss after tax - $275.6 million.

Costs - $336.1 million (net of $201.4 million from the Nixon sale)

Adjusted (read, pretend) net profit after tax - $33.5 million on revenue of $1.55 billion (3.1% - awful).

Revenue: -7.9% on 2010/11

EBITDA: -40.9% on 2010/11

Naude buying back the farm would breathe more life back into the corpse than just about anything else I could think of. Certainly makes more sense than letting Launa do her thing. She still doesn't get the significance of hard-core surfers deserting the Billabong brand in droves.

Just had another look at the 2011/12 accounts: gross margin in sales was 47.7%, down from 53.8% in 2010/11. Another portent of an unwanted brand. Not the direction that you want your selling margin to be heading. A drover's dog can sell stock by cutting the guts out of its price.

Naudes bid has to be seen as a vote of no confidence in Laurna Inmans leadership.
Interesting he is not including Merchant in the proposal

Pretty well trod tactic for unloved stocks but it remains a long shot; whatever spooked Bain & TPG (and/or their co-financiers) during DD will not have been resolved yet.

Still looks cheap on earnings multiple vs. peers (and debt less of an issue post last capital raise) if you have the balls but a) you need to be comfy with the macro risks (to discretionary - especially lifestyle - retail in general and BBG's brand positioning specifically) and b) you have the time, this is a 3-5 year turnaround play from here minimum.

If Naude pulls it off, it'll be a vastly different (leaner, meaner) business; turnaround specialists aren't known for bro'ing out. Naude will simply be the front man (albeit with an increased shareholding vs. today, likely via options/performance shares), someone else will make the big decisions on strategy, capital expenditure, acquisitions etc.

BBG's strategy to date hasnt been entirely misguided in my view (opening retail stores hasn't harmed Nike or Apple for example - although their approach was a little different, they treat their retail stores as 'experiential' centres rather than large scale revenue drivers) but their timing was terrible - and timing is everything. Also, they clearly didnt have the skill set at Exec/Board level to execute on a multi country, multi brand, multi channel strategy so management (right up to Merchant) hubris also likely to blame.

My tip - Naude won't get it off the ground, and it's a long slow recovery under Inman. Once the earnings stabilise over next 18-24 months, and they recover market trust, they'll become more attractive again as a target. Wouldnt play this one from here as a retail investor, leave it to the pros.

My tip - unless Naude gets it off the ground, under Inman it'll be a quick, sharp and ultimately nasty decline into mainstream oblivion for the Billabong brand, and the other brands will be progressively sold off for cash at the behest of the (now-trapped) institutional shareholders.

Inman's track record (particularly the last seven years) is woeful, she doesn't understand brand management in general or the ferocity of the hardcore surfing culture in particular, and she has not the faintest idea when it comes to on-line retailing.

Wouldnt play this one from here as an investor, period.

Fair call re: playing it from here, period ... but ... instos and those in the know will continue to trade the rumours. Ave daily volume in BBG last 3 months (since end Aug) has been c. $10m so trades are still happening. All depends on your entry price.

Also point taken on brand oblivion, definitely one of a dwindling number of possible outcomes ... for me, they've just come off life support but are still in ICU, and they could go either way from here.

But my guess (tip makes it sound like I know what I'm talking about, and I don't) is vs. the 83.5c BBG is today, there remains the chance of upside. Happy to revisit with you in 12 months time with a 6 pack to the winner mate ... I'm calling it'll be north of 83.5c, you're calling down.

Deal?

I'll be in on that 6 pack and offer you another scenario.
Naude is looking to get out and this is his best option.
He will not be successful and subsequently his position on the board will be untenable. He will have his stake in the company bought out by the remainder of the board (led by Inman and maybe Merchant) for a reasonable price, maybe about 1.00-1.20 a share and will walk away a rich man...much better than one of his other options of 0.00 a share.
Billabong doesn't sell to surfers anymore, and it's position as a major sponsor of surf comps is diminished by the fact that ZoSea, with it's Quiksilver connections, now dictates who sponsors what.
It can't even maintain the Aust Open of Surfing, one of the most profitable (but not necessarily profit making) surf comps of recent times.
It is shot. It doesn't know who to sell to.
I'll predict a final share price of 0.00 in a couple of years

Possibly, depends if Naude geared up the shares during the good times. In which case he needs to double down to try and rescue his personal P&L. Buck a share may not do it.

He could also be doing it for the love but you'd think he'd dial Merchant in for that and he hasn't by all accounts. So looks a straight numbers game one way or another.

BBG have destroyed an Elders'esque 95% of shareholder value since the peak so the trendline certainly points towards $0.00. Lowest research price I've seen is c. 40c a share, by my calcs current Net Tangible Assets (Total Assets - Goodwill or Intangibles / Total Number of Shares) on the FY13 forecast comes in at about $0.50 so $0.40-0.50 looks roughly the floor on current numbers. But those can, and have in BBG's case, change very quickly.

Love to know what the PE guys saw during DD, presumably they explored all options (inc splitting up the group and selling the assets one by one) and none of em worked so I may well owe 2 x 6 packs here, haha.

Also, I think the whole 'Billabong dont sell to surfers anymore' line is something of a furphy, I would have thought it's been years since the 'core' market underwrote the revenue base in a material way. That's not a new trend.

I'll spot you the beers, but I don't have the faintest idea of Naude's chances. If he gets (private) control, the Billabong brand has a better chance of regaining relevancy; if he doesn't, the company's short term (next 12 month) profitability will probably rise (on increased sales volume but at reduced selling margin) but its medium to long term (3-5)outlook would not be great.

To my mind, that's what spooked the vulture capitalists. VCs want businesses operating at 30 to 50% off their potential, not ones that are just getting by.

Let alone ones that can't tell in real time what their best selling items in each store/region/market are.

Yeah 3-5 year view I've seen is its 2014/5 before real improvements are seen to returns. Sales flat through next couple years, costs stripped out to protect margins where possible in the interim. Pretty 101.

Agree on your last comment, they've sucked at back end integration from what I've heard ... maybe still some property exposure to work through as they shut underperforming stores.

I reckon the PE/VC guys will keep a watching brief on the group, and are guessing they'll get a crack at a cleaner and cheaper (relative to fwd earnings, not just the sticker price) vehicle in 12-24 months time.

Yep, agreed. Merchant must be going quietly mad. Lost his company to the suits, lost his cred, and still may have to face disgruntled shareholders and lose his shirt.

According to the AFR, Billabong are considering floating SurfStitch.

http://www.businessspectator.com.au/bs.nsf/Article/Billabong-eyes-float-...

From the first paragraph "Billabong International Ltd is considering the possibility of listing its internet retail arm, which includes rapidly growing website SurfStich"

Although this would give them a big boost in finances, I don't think it would be wise to sell off their online portal, which is "growing rapidly" especially when everything is moving online.

Surely they have to hang on to Surfstitch and Swell and use them as a stepping stones to increase their sales again rather than cutting it off and having no online presence.

Haven't they learnt from their failed investment in brick and mortar shop fronts?

Billabong are also trialing a new online ordering platform located inside their stores. So, if they don't have something available they'll find it online and ship it to the customer.

http://www.smartcompany.com.au/retail/052966-in-store-online-shopping-de...

Hmmm, more turmoil ahead.

http://www.businessspectator.com.au/bs.nsf/Article/Billabong-set-to-knoc...

The bad news just keeps piling up - possible withdrawal, profit downgrade, asset revaluation. Jeebus!

http://www.theage.com.au/business/billabong-bid-at-risk-after-leaks-2012...

@whaaat,

Turmoil?

naaa.

Paulie, and those financial back packers at Sycamore will slowly be swayed to up their bid by five or ten Aussie centavos.

Which had been. factored into their bid. (if you don't ask me),.... And this one will be a done deal.

Truth is, is not all of the real "turmoil"... that which is in Bong's past history?

Now, if and when the Congo Bongo I deal finally consummates, which other surf tog firm do you think Parko and Taj jump too?

Inquiring minds want to know.

Rolls, you're sounding more and more like the Idiot Bunny with each post. Tell me it ain't so, Joe.

BBG down 10% so far today. I presume this is the market not liking the offer?

Earnings downgrade again Ben.

Previous guidance of $100-110 Million downgraded to $85-90. Just a never ending spiral of downgrades. Earnings are in freefall.

Thanks lolo.

Ben, worth reading this commentator's view.

http://www.businessspectator.com.au/bs.nsf/Article/billabong-takeover-pa...

Thanks whaaaat, that was very interesting. It's all about the timing, eh?

Billabong - the gift that keeps giving. Now Craig White's gone. Acceptance of Naude's bid is looking more and more likely.

http://www.businessspectator.com.au/bs.nsf/Article/Bryant-named-interim-...

Always find it cringe-worthy when non-endemic publications try to use surfing catch phrases in their articles. From the Wall Street Journal:

"After missing a couple of big waves recently, Billabong's board should waste no more time catching the beach breaker that has just rolled in."

"But as every surfer knows, it is better to be riding a two-foot wave than waiting for the big one that never returns."

*shudder*

http://online.wsj.com/article/SB1000142412788732446160457819066225102692...

Paul Naude's been given a look a Billabong's books. With up to six weeks expected for due diligence (and assuming they'll work over Xmas) this means we could see some action in early February, if not before.

http://www.smh.com.au/business/billabong-gives-suitor-a-look-at-the-book...

last price 83 cents, buy bong now.....?

The final consummation of this takeUNDER offer for shares of BBG may ultimately prove that...

it's better in boardrooms!

An interesting analysis: http://www.theaustralian.com.au/business/opinion/change-of-tactics-from-...

In other news, Commonwealth Bank sold off almost 10 million Billabong shares just before Xmas: http://www.finnewsnetwork.com.au/archives/finance_news_network22557.html

hot potato, hot potato

The co-founder of Quiksilver Inc. will step down this month as CEO, as the surfing outfitter makes its first change at the top in more than two decades.

Former Disney executive Andy Mooney, 57, will take over as chief executive, succeeding Robert B. McKnight Jr., 59, who took the job in 1991.

Yeah, saw that yesty z-man - very interesting news. I started a forum thread on it (if anyone's interested) - can we keep all Quik discussions there? http://www.swellnet.com.au/forums/1/topics/1949

@ Victor, sell, still some good profit left in Billabong at 83c if you can short it. Buy? Why? What for? It would be like gambling on a 45 degree heat wave in Tasmania in winter. Over 95% of people lose money in the share market. Rule one, never to be broken, never, ever, ever trade against the trend. Over 95% of people say no worries we'll never, ever... hold it!!! Shit, its going that way, lets go the opposite, it surely has to change now, imagine how much we'll make, quick, we better get in now before we miss out!!! Ahhh shit!!! Oh well, its only money, we can afford to give it away.

While all appears quiet on the Western Front, no doubt there's furious activity behind the scenes at Bong.

In the latest news, the Fin Review today reported that Bong's head of human resources Chris Zyner has left, and that it also believes sales/marketing head Reid Peter has taken the exit. If true, this puts even more pressure on the board to seriously consider Naude's $1.10 offer.

@Whaaaat,

you may be right, sir. there has to be heaps of serious harumpfing going on behind the scenes.... don't cha think that with your report of these latest defections it's all just a matter of time?

i'm still in the camp that thinking is when the 1.10/price of a bar of wax offer is increased to the cost of a wax comb, (ten or fifteen cents), this deal is done.

Whaaaat, another interesting departure from Billabong - Julian Blanchard, who was International General Counsel for many years (about eight or ten, if I'm not mistaken).

And if the name sounds familiar, you're probably right - Julian is the brother of Andy who charges in South Oz. I actually remember surfing with Julian at Yorkes once or twice when I was a grommet.

http://www.lawyersweekly.com.au/appointments/ex-billabong-gc-dives-into-...

For a busy bloke like you, Stu, that'd be Ken Blanchard, I guess?

In other news, Inman has defended the staff exodus. "Transformation is key for Billabong, she said. I'm sure there are people that don't like to see the changes. They want the business to be what it was. I'm here to increase shareholder value. That's my job. We have a lot of unhappy shareholders."

Well, yeah, but I'm still unconvinced - I still reckon she doesn't geddit. Actually, many of us punters do want Bong to be what it was. Where's the plan to get the hell out of stand-alone retailing and to instead support owner-operators? to serious R&D? to making authentic, good-value, interesting clobber? Enough with the spin. Bring on private ownership.

Billabong have appointed a new CFO - Peter Myers, formerly of Network Ten and APN News and Media.

http://www.smh.com.au/business/billabong-appoints-former-ten-exec-as-cfo...

Wow.. this is an interesting development. Billabong have received a second takeover proposal at $1.10 per share, but this time by a consortium consisting of a private equity firm and clothing group VF Corp (who own Vans, Reef, The North Face, Lee, Timberland, Wrangler and 19 other brands: http://www.vfc.com/brands).

http://www.smh.com.au/business/billabong-receives-counteroffer-20130114-...

That really IS interesting! A bidding war may be just about to break out. And the new bidder knows how to run clothing brands properly.

http://www.reuters.com/article/2013/01/14/us-australia-billabong-idUSBRE...

Just pulled the below off IRESS, adds a little more colour re: latest BBG offer:

"U.S. clothing maker VF Corp. and its private equity partner Altamont Capital say they plan to break up the iconic Australian surf wear company if their 526.8 million Australian dollar (US$556 million) offer succeeds. VF Corp. has set its sights on the Billabong brand as it chases a larger share of sales in the action sports wear category, where it already has a significant presence through brands such as The North Face and Timberland for outdoor hiking and Vans skate wear.

Altamont, however, is interested in Billabong's other brands, which include Von Zipper, Tigerlily and Element. A statement issued by the bidders late Monday says Altamont's interest reflects its "mandate to invest in situations where it can provide strategic and operational support to build business success stories." VF Corp. is no stranger to bidding for brands that appear to have lost their way, or face more intensive competition. Its US$2.3 billion bid for Timberland in 2011 came at a time when the boot maker was grappling with rising costs of raw materials, labor and transportation costs. Weeks before VF Corp. made its move, Timberland reported a 30% decline in its profits on higher production costs, causing its shares to sink more than 25%.

Parallels can be easily drawn between the pressure facing Timberland then and Billabong now. The Australian company is in the middle of a transformation program aimed at growing earnings before interest, tax, depreciation and amortization by some A$155 million by 2016 by closing less profitable outlets, making its products and stores more appealing, investing in its e-commerce platform, and integrating its global supply chain. But Billabong's shares have yet to respond. A string of profit warnings and several failed takeover bids last year, including from private equity firms TPG Inc. and Bain Capital, have badly dented investor confidence. The most recent downgrade came just before Christmas when Billabong slashed its profit forecast in half, blaming weaker than expected trading conditions at its Americas and European divisions.

"When compared to other transactions in the action sports space and considering brand equity alone, Billabong appears to offer a lot to an experienced brand manager with a track record of successfully extracting maximum value from global brands," says Michael Simotas, an analyst at Deutsche Bank.
VF Corp. has revitalized the Timberland brand since acquiring it. In the Asia-Pacific region alone, it is expecting Timberland to grow at an annual rate of 13% over the next five years. It also has a significant sales footprint that the Billabong brand can slot into, especially in major new markets like China and India where incomes are rising and consumers are seeking out brands that match their aspirations.

"We have long thought the Billabong brands would be a sensible fit for VF Corp. Given its attraction to global brands which are not broken but have potential to improve and its other investments in the action sports space, such as Vans and Reef," Mr Simotas says. He believes the emergence of a rival bid to a group comprising Sycamore Partners and former Billabong director Paul Naude means the chances of Billabong being taken over has nearly doubled to 80%. Mr. Naude and his backers made a A$1.10-a-share cash offer for Billabong last month, a price that VF Corp. and Altamont matched in their non-binding proposal.

Altamont describes itself on its website as a private equity firm with US$500 million in capital focused on investing in "change-intensive middle market businesses." It lists investments in U.S. used-car sales and finance business J.D. Byrider, decorative fabrics company Robert Allen Group, and vinyl window maker Cascade Windows. Credit Suisse says Billabong's weak negotiating position is underscored by the apparent lack of break fees involved in either proposal. As a result, it sees "a low probability of significant upside risk" to the offers already on the table."

Just pulled the below off IRESS, adds a little more colour re: latest BBG offer:

"U.S. clothing maker VF Corp. and its private equity partner Altamont Capital say they plan to break up the iconic Australian surf wear company if their 526.8 million Australian dollar (US$556 million) offer succeeds. VF Corp. has set its sights on the Billabong brand as it chases a larger share of sales in the action sports wear category, where it already has a significant presence through brands such as The North Face and Timberland for outdoor hiking and Vans skate wear.

Altamont, however, is interested in Billabong's other brands, which include Von Zipper, Tigerlily and Element. A statement issued by the bidders late Monday says Altamont's interest reflects its "mandate to invest in situations where it can provide strategic and operational support to build business success stories." VF Corp. is no stranger to bidding for brands that appear to have lost their way, or face more intensive competition. Its US$2.3 billion bid for Timberland in 2011 came at a time when the boot maker was grappling with rising costs of raw materials, labor and transportation costs. Weeks before VF Corp. made its move, Timberland reported a 30% decline in its profits on higher production costs, causing its shares to sink more than 25%.

Parallels can be easily drawn between the pressure facing Timberland then and Billabong now. The Australian company is in the middle of a transformation program aimed at growing earnings before interest, tax, depreciation and amortization by some A$155 million by 2016 by closing less profitable outlets, making its products and stores more appealing, investing in its e-commerce platform, and integrating its global supply chain. But Billabong's shares have yet to respond. A string of profit warnings and several failed takeover bids last year, including from private equity firms TPG Inc. and Bain Capital, have badly dented investor confidence. The most recent downgrade came just before Christmas when Billabong slashed its profit forecast in half, blaming weaker than expected trading conditions at its Americas and European divisions.

"When compared to other transactions in the action sports space and considering brand equity alone, Billabong appears to offer a lot to an experienced brand manager with a track record of successfully extracting maximum value from global brands," says Michael Simotas, an analyst at Deutsche Bank.
VF Corp. has revitalized the Timberland brand since acquiring it. In the Asia-Pacific region alone, it is expecting Timberland to grow at an annual rate of 13% over the next five years. It also has a significant sales footprint that the Billabong brand can slot into, especially in major new markets like China and India where incomes are rising and consumers are seeking out brands that match their aspirations.

"We have long thought the Billabong brands would be a sensible fit for VF Corp. Given its attraction to global brands which are not broken but have potential to improve and its other investments in the action sports space, such as Vans and Reef," Mr Simotas says. He believes the emergence of a rival bid to a group comprising Sycamore Partners and former Billabong director Paul Naude means the chances of Billabong being taken over has nearly doubled to 80%. Mr. Naude and his backers made a A$1.10-a-share cash offer for Billabong last month, a price that VF Corp. and Altamont matched in their non-binding proposal.

Altamont describes itself on its website as a private equity firm with US$500 million in capital focused on investing in "change-intensive middle market businesses." It lists investments in U.S. used-car sales and finance business J.D. Byrider, decorative fabrics company Robert Allen Group, and vinyl window maker Cascade Windows. Credit Suisse says Billabong's weak negotiating position is underscored by the apparent lack of break fees involved in either proposal. As a result, it sees "a low probability of significant upside risk" to the offers already on the table."

Interesting, mickj. cheers for the update....

didn't someone here post up the opine that a higher bid was forthcoming?

something along the line of upping the price offer right around the wholesale price of a wax comb? ;-)

with another bidder entering the building, don't know who will be the final purchaser, but in my stupid opinion, this one is a done deal.

Elvis. El Vez. and AI Forever.

Yeah I agree mate, change of control heavily likely to happen from here.

Anyone that had the risk appetite and traded in at 70-80c in last 3-4 months can sell now to cover the initial investment, with the balance free carried through to the $1.10 completion if they want to really play. Otherwise you're out with +25-30% on your money, handy earn.

Of all the groups that have had a look (that we know of), VF Corp unquestionably have the best creds to revitalise BBG.

VF have been sniffing around this deal for a couple of months, bong is currently 95c .....if youve got a spare 5 or 10 k ,buy bong now for a nice new year profit......greasy's been out of the country for 3 mths putting this together.

If the VF/Altamont deal is successful, it looks like D. Scott Olivet will be running the non-Billabong brands. He's currently a Director of Skullcandy, was CEO at Oakley for five years and Chairman for two years, and was also a former VP at Nike.

http://www.theaustralian.com.au/business/mergers-acquisitions/vf-corp-an...

While we wait for due diligence to be completed, it seems there is some activity starting to bubble: "TIAA-CREF, owner of the fourth- largest U.S. life and health insurer, took a 5.2 percent stake in surfwear maker Billabong".

http://www.bloomberg.com/news/2013-02-06/tiaa-cref-takes-5-2-billabong-s...

Have no idea if this announcement has any bearing on anything - TIAA started building its stake on 10 October last year, two days before TPG withdrew its second bid and two months before Naude threw his hat into the ring.

PS. For a bloke who ran the largest division in the company, Naude is taking an inordinate time to complete his due diligence. Or more accurately, his proposed equity providers are.

Or they don't trust his word.

Another announcement when there's still no news to report:

http://www.theaustralian.com.au/business/companies/peter-bryant-to-overs...

Billabong is scheduled to release its interim results this coming Friday. Expect this will trigger some further announcements, perhaps even a firm bid confirmation.

For those still interested: TIAA and the Teachers Union have between 6 Feb and last Friday lifted their combined shareholding to 6.2%, just ahead of this week's release of half-year results to 31 December 2012.

Have no idea of significance, if any. A pretty big punt with teachers' super funds though.