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LVB is not just about pianos, even though it capitalizes on one of its brands and calls itself Steinway Musical Instruments. Pianos are only slightly more important to sales and gross margin than the Conn-Selmer line of band instruments, Ludwig drums, Messer, etc.

This is also a company that continues to struggle financially, with a pot load of high yield long term debt, too much short term debt, and what looks like too much trade finance as well. This deal with Samick allows LVB to retire some expensive debt and improve their debt/equity ratio, without LVB giving up any control in the form of voting rights. Plus they probably get some synergistic entree into China, I would guess mostly for their band instruments.

The company makes no secret of the fact that piano sales are down worldwide and will remain depressed. They've reduced production to get inventories in line with a lower level of sales and they've let people go. In this respect they are no different from thousands of medium size companies worldwide that were over-leveraged, but the difference is they acknowledge their piano product line is facing problems.

Another way to look at this is that high end pianos benefited significantly from the housing bubble around the world, and the free credit that was being passed out by reckless banks. Most customers otherwise would not have had $75,000 in cash to buy one of these instruments. Steinway's top of the line grand piano sales will be stagnant for as long as it takes housing and/or consumer incomes to recover, which could be years and years.

Overall, no company wants to sell equity just to retire debt, even if voting rights aren't affected. This isn't a sign of strength, it's a sign of weakness for Steinway Musical Instruments and for the markets and products it represents.

Mr. Kim is paying a significant good faith premium as an introduction into Steinway. I certainly wish both Mr. Kim and Steinway the best of luck with this joint venture.

While I am surprised he is receiving no Class A shares I am sure a man of his accomplishments knows what he is doing.

Long live Steinway, they can build a great piano.

And Samick's line will have the aura of its association with the Steinway name - sort of an extended family of pianos.

well, it's happened in other industries. Think Lenovo buying IBM's PC business including the ThinkPad laptop business and brand. The sky didn't fall thru that transition. Chinese companies also own or have sizeable investments in many resource companies.

What about Steinway in Hamburg?
It is an entirely different entity from the American Steinway, correct?
What are they thinking in all of this?

"What about Steinway in Hamburg?
It is an entirely different entity from the American Steinway, correct?"

What on earth would make you think that?

Personally I have come to believe that companies, including piano companies, have a distinct advantage to be run by one head instead of corporations with many heads and/or variable interest groups.

It was one of the great successes of postwar Germany that the less complicated management happened to be, the more work got actually done.

Many compamies then survived and later even thrived because of the highly focused interest by one head instead of two, three or more parties, all breathing down each other's necks.... [wifes excluded... ]

These are tough times for many companies and the [healthy] survivors in future will be those with 100% undivided focus on highest possible quality at very best possible prcie.

No squabbling, infighting, time wasting or power struggles.

Perhaps that's why pianoloverus and me could never run the same company....

Norbert

OK, help me out guys.

Are Bechstein out of business ? Did Samick pull out at some point ?

What happened ?

Please tell.

Karl Watson
Staten Island, NY

As far as I know Samick still has a 30% share of Bechstein and there continues to be a strong working relationship between the two companies.

Speaking as both a piano aficionado and investment aficionado I have just one contribution to make here:

Does everybody know what Steinway's ticker symbol (LVB) comes from?

When I first saw it, I had no idea. I had to ask.....

good one!

How about Ludwig van Beethoven?

As an old-timer, I'm still reeling from when CBS bought Steinway or whatever. I didn't really understand what that deal was (it was around 1987 or so), but it worried me. After that, I stopped thinking about the "corporate" aspects, because I figured I'd rather not think about it.

BTW........Does anyone know what ever became of the CBS connection?

You are now officially our investment guru.

Mark

I will tell you if you will teach me to play Opus 2 No. 1!!

Scriabin - omigod!

When something is a publicly traded company, it's pretty much obligated to that.

Bingissimo!!!

I think we might have a deal here -- I teach you a stupid Scriabin etude, you make me millions.

Worth it - to me, anyway.

The CBS connection was severed when they sold Steinway to the Birmingham brothers, who, I understand, did their level best to continue running the company into the ground, following CBS's footsteps.

The company was subsequently sold again to the present owners. It may not be widely known that the top 2 executives control some 90%+ of the Class A voting stock (from memory - check my numbers).

In my opinion LVB is a great short here.

Named after some hack composer, Ludwig Von Beethoven, or some name like that