Not sure if anyone saw this before. It came to me on another e-mail list. Things are not looking too good for Meade. The FTC is still against its proposal to buy Celestron. The day may come when all of our scopes will be made in china.
Bill Drelling
Saturday, April 2, 2005
Meade's horizon troubled
Irvine telescope maker tries to reassure staff after FTC says it will fight
merger.
By TAMARA CHUANG
The Orange County Register
Meade Instruments assured its 300 manufacturing workers Friday that it would
do everything to keep those jobs in Irvine, even as overseas competition in
the hobby telescope market intensifies.
"We're committed to innovation and quality, and we believe that it's best
done through maintaining our current situation," said Robert Davis, Meade's
senior vice president of corporate development.
But the business of making telescopes is changing. Overseas competitors are
copying the technology at lower costs and charging lower prices. Meade and
its closest U.S. competitor, Celestron, both manufacture telescopes in
California. But Celestron hasn't been able to make the business succeed. The
Torrance company is near bankruptcy and may be acquired by Taiwan competitor
Synta any day now.
Joseph Lupica, Celestron's chief executive, did not return calls Friday.
"The reality is that we've got to look at competing with an Asian
manufacturer that's not subject to the same regulations in the U.S. and here
in California. And their labor is much less," Davis said.
To survive, Meade and Celestron had formed an agreement to merge, which
would save Meade $2 million to $3 million a year after eliminating
duplicative expenses.
But with the Federal Trade Commission protesting previous merger attempts,
the two companies sought FTC approval ahead of time, this time using the
"failing firm" doctrine, which could allow two rivals to merge if it
otherwise meant one would completely exit the market.
The FTC has not made a decision, and spokesman Barry Nigro declined to
comment on the case. But Meade has been told by the FTC that if the two
companies proceed with the merger, the FTC would fight it, Davis said.
"It's just sad that those technologies and jobs are going to go to Asia
because the federal government was unwilling to complete its analysis in a
timely fashion," he said.
Manufacturing jobs in Orange County are on the decline from the days when
aerospace dominated the area, according to the Orange County Business
Council. But local manufacturing jobs make up 13 percent of all county jobs,
which is still a significant number, said Paul Garza, its vice president of
economic and workforce development.
"Manufacturing, especially what we have here in the county, it's all really
high quality," Garza said. "What usually keeps companies here that have the
potential to go overseas is they want that close relationship with research
and development and manufacturing."
Meade has diversified its product line since the 1990s, expanding into
lower-priced telescopes, rifle scopes and binoculars with built-in digital
cameras. The 550-employee company is working on new technology in each
segment with the goal of sharing the high-end innovations with lower-priced
product lines.
That has encouraged Paul D. Sonkin, chief investment officer for Hummingbird
Value Funds, to keep his money invested in Meade. The fund owns more than 8
percent of Meade.
"If they are selling a commodity, they have a problem. If they can
effectively differentiate their product, it's no longer a commodity and they
get better pricing power. That's why you buy Prada shoes instead of shoes
from Payless," Sonkin said.
Meade's revenues for the fiscal year ending Feb. 28 are expected to be $112
million, down from the prior year's $138 million. The company is also
expecting a loss, compared to a profit of $2.45 million last year. Meade
reports its 2005 financial results on April 21.
Another reason for slower sales could be Meade's recent strategy to sell
lower-priced - and lower-quality - telescopes in department stores to reach
a wider audience, says Russell Sipe, past president of the Orange County
Astronomical Association.
"Celestron and Meade put out some crappy telescopes to sell in department
stores. We (amateurs) felt like they sold out. They just weren't the quality
that they could be and people were going to try it and not like it and get
turned off of astronomy," Sipe said
Meade Instruments rebuffed in merger effort
Federal agency opposes Irvine telescope firm's purchase of area rival.
By TAMARA CHUANG
The Orange County Register
Irvine's Meade Instruments questioned how long it could keep manufacturing
telescopes in Orange County after its last-ditch attempt to buy a struggling
rival was stymied for the third time by a federal agency.
Meade and Celestron in Torrance have competed for years. But falling sales
and competition from Asia have hurt the rivals, which both make telescopes
in California. The union could save $2 million to $3 million a year in
expenses, Meade says, and that could help make both profitable again. Or
else, Meade, which employs 550, must do its manufacturing abroad to stay
competitive.
"We want to combine our companies so we can have sufficient sales to
continue to invest in lines we have manufactured here," said Robert Davis,
Meade's senior vice president of corporate development.
Since the Federal Trade Commission fought Meade's bids to buy Celestron in
1990 and 2002, this time the companies sought the FTC's blessing first, but
the agency's staff has again opposed the sale.
"What Meade wants to do is have us do something outside the normal process.
It's an unusual situation," said Barry Nigro, deputy director in the FTC
Bureau of Competition.
Celestron is near bankruptcy but has one other potential buyer, Taiwan-based
Synta, which has offered less than it would get by liquidating Celestron,
Davis said. Meade's offer is for $7.5 million.
Meade's U.S. sales of hobby telescopes plunged to $15 million last year,
compared with $38 million in 2001, because of overseas competitors' lower
costs, Davis said.
Joseph Lupica, Celestron's chief executive, could not be reached.
Celestron's sale to Synta could go through today, Davis said.
====================================================
For help and information on the Acceptable Use Policy, visit
http://www.mapug-astronomy.net/pages/Subcrb_AcceptUse.html
MAPUG is hosted by Software-y-Ddraig (Dragon Software)
http://syd.tigranetworks.co.uk
====================================================
---------------------------------
Do you Yahoo!?
Better first dates. More second dates. Yahoo! Personals
Received on Tue Apr 5 15:51:59 2005