sober reflection on an inebriated conversation

Andy Gee said:

warning: complex and convoluted

Last night I had a drunken conversation

<wacky money making scheme snipped>

That all sounds quite interesting, but I'm not sure of the wisdom of
investing in a plan that begins as a "drunken converstation".

Rich

Andy Gee said:

So therefore, the put-up-or-shut-up to my argument is to make a market
bet on the resolution of the CAA transportation market inefficiency.
And so the google and yahoo financials were fired up, with the following
results:

Quoted message said:

Cannondale is bankrupt and trading in their stock is halted.
Trek is a family business with no stock to buy.
Schwinn is now a division of a Canadian company which is doing quite
well. It would take a Warren Buffet style takeover to jar it loose.

Quoted message said:

But...

Quoted message said:

Huffy (also owns Royce Union) is about to emerge from bankruptcy with
their stock trading at less than 2 cents a share. Their total market
capitalization is $327,000. Less than half a million dollars. Whole
company. It may be possible for a group of very small investors to
actually purchase a controlling interest in Huffy with funds just lying
around idle in 401k plans.
The goal would be to take over and issue a corporate press release that
Huffy will reinvent itself as a commuting bicycle specialist, and will
spearhead a plan to mandate and manage a tailpipe pollution warrant
market. Whatever happens, the press release would have to be taken
seriously on the Street. Everything, even the wildest pipe dreams, have
to get taken seriously on the Street if they come from corporate press
releases. No one can afford to miss a possible move.

Here are some possible outcomes:

Everyone loses their 2 cents a share, laughs, and hopes it can offset a
gain somewhere else.

The press release is taken seriously, it generates some buzz, some
people think it's a good idea, and the stock shoots up to a whole dime.
People can cash out or let it ride.

Someone else is planning on scooping up Huffy. They would have to bid
up the 2 cents a share to do that. The stock shoots up to a nickel or a
dime, and everyone cashes out.

The press release ultimately leads to a workable plan of action. Huffy
is sitting on a business that can sell households $500 worth of bike
stuff for $2,000 while the households receive $5,000 for making the
purchase. That's a pretty good position to be sitting in.

That's what it looks like in the light of day. I'm going to start doing
more research into this now. If anyone has any interest in this concept
(concept only, I'm not looking for any money from anyone) please let me
know.

--ag

Of course, Huffy may resist such a takeover via poison pills, etc.

Also, there's a reason stocks go that low - terrible earning / bad P/E
ratio come to mind. Even if you could purchase it, who's to say that
any plans would be feasible. I also don't know about how the current
bankruptcy legislation may affect Huffy's future. You'd need someone
well-versed in corporate law or finance for that.

Also, with high debt and low consumer confidence, I think Huffy would be
in for a long fight to reposition themselves as a "responsible,
commuting" bike company. You say "Huffy", I say "Piece of [censored]."

Huffy is looked down upon by a lot of people, especially avid bicyclists
who know a thing or two about bikes. Defining your target market is an
important consideration, and: Who are they? Personally, it would take a
LOT of convincing for me to buy a Huffy. Huffy would need some big $ in
an advertising campaign to let people know they aren't selling pieces of
[censored] anymore. So where is this capital coming from? Current sales?
Just putting "Under New Management" on their website isn't going to cut
it. You'd need high-profile ads in the serious bike mags and you'd need
to get your products reviewed in the April editions of Bicycling to get
people seriously thinking about it, I think.

They would probably have to sell their first line of products at close
to cost, limiting profits just to get some sales and market share.
There's no chance of using a price-skimming technique here, I don't think.

If you're looking at bankruptcy-troubled bike companies to re-invent
themselves over time, I'd look to Cannondale. They have a wider product
range and depth, which gives them more flexibility in releasing
speculative products. Also, they wouldn't need a costly PR ad campaign
to reinvent their image.

Thanks for posting your ideas, though - very interesting...

******
By the way, I had this extremely bizarre dream last night that I was
riding a super high-end Huffy that was worth thousands of dollars and
was a dream to ride. It was very fast. Then I woke up. No joke. I'm
serious. So maybe there's something there after all...

Bill Henry said:

Huffy is looked down upon by a lot of people, especially avid bicyclists
who know a thing or two about bikes. Defining your target market is an
important consideration, and: Who are they?

The BBaka's of the world. And there's lots of them.

Maybe even Bill himself could be the spokesman. Who needs Lance when
you got Bill? He's legendary!

Rich

Rich said:

Bill Henry said:

Huffy is looked down upon by a lot of people, especially avid
bicyclists who know a thing or two about bikes. Defining your target
market is an important consideration, and: Who are they?

The BBaka's of the world. And there's lots of them.

Maybe even Bill himself could be the spokesman. Who needs Lance when
you got Bill? He's legendary!

Rich

Rich,
I have pretty much wore out the Huffy but it never did break
disastrously, like on a jump or anything. I just wore out bearings and
grips and tires and kind of got tired of fixing things.
Then came the Mongoose which got its fair share of miles and abuse and
now seems to need a bottom bracket.
My latest is a little more upscale, a Pacific Nomad, Aluminum no less.
The only thing I would be a spokesperson for is to get out there and do
it. Get off the couch.
Bill

Rich <[email hidden]> wrote in news:11k0co5p742n4c6
@corp.supernews.com:

Quoted message said:

Andy Gee said:

warning: complex and convoluted

Last night I had a drunken conversation

<wacky money making scheme snipped>

not a money making scheme -- an idea to get practical cycling the respect
it deserves, which would probably lose money, but has a dim chance of
actually making money.

Quoted message said:

That all sounds quite interesting, but I'm not sure of the wisdom of
investing in a plan that begins as a "drunken converstation".

Rich

me neither -- that's why I'm airing it in the light of day.

Thanks!

--ag

Quoted message said:

Bill Henry <[email hidden]> wrote in
news:[email hidden]:

Quoted message said:

Of course, Huffy may resist such a takeover via poison pills, etc.

Also, there's a reason stocks go that low - terrible earning / bad P/E
ratio come to mind. Even if you could purchase it, who's to say that
any plans would be feasible. I also don't know about how the current
bankruptcy legislation may affect Huffy's future. You'd need someone
well-versed in corporate law or finance for that.

I had my nephew the ex-stockbroker over for lunch to pick his brain, and
that's basically what he said. Plus he said that the market cap is not
the total value of the company; there may be other shares not on the
market. He talked me down a little, but not all the way down.

Quoted message said:

Also, with high debt and low consumer confidence, I think Huffy would
be in for a long fight to reposition themselves as a "responsible,
commuting" bike company. You say "Huffy", I say "Piece of [censored]."

Huffy is looked down upon by a lot of people, especially avid
bicyclists who know a thing or two about bikes. Defining your target
market is an important consideration, and: Who are they? Personally,
it would take a LOT of convincing for me to buy a Huffy. Huffy would
need some big $ in an advertising campaign to let people know they
aren't selling pieces of [censored] anymore.

No one in this group would be a potential market. The market would be
people who are _not_ regular riders but who are motivated to attempt
riding instead of driving via the pollution warrant program. The value
of buying a Huffy would be that Huffy, as the pollution warrant leader,
could do the warrant paperwork for you and get you the best price.

Quoted message said:

If you're looking at bankruptcy-troubled bike companies to re-invent
themselves over time, I'd look to Cannondale. They have a wider
product range and depth, which gives them more flexibility in
releasing speculative products. Also, they wouldn't need a costly PR
ad campaign to reinvent their image.

I thought of Cannondale first, but they're not trading now. There would
have to be a consortium with actual money to do anything there.

Quoted message said:

Thanks for posting your ideas, though - very interesting...

My Pleasure!

Quoted message said:

******
By the way, I had this extremely bizarre dream last night that I was
riding a super high-end Huffy that was worth thousands of dollars and
was a dream to ride. It was very fast. Then I woke up. No joke.
I'm serious. So maybe there's something there after all...

I'm guessing it's harder to make a "bad" bike than a good bike. The
engineers all want to design good bikes, workers would rather build
quality stuff than [censored]. You have to work hard to keep quality down.

--ag

Quoted message said:

Andy Gee said:

I'm guessing it's harder to make a "bad" bike than a good bike. The
engineers all want to design good bikes, workers would rather build
quality stuff than [censored]. You have to work hard to keep quality down.

--ag

I wonder sometimes.

Many products seem nowadays to be designed with planned obsolesence.
For example, most vacuum cleaners sold at X-mart are designed to break
down or wear out in a few years, at which point you go out and buy a new
one. The warranties are a joke and service is expensive. I see the
same thing when I look at Huffy, Magna, etc.

At some point, some suit aiming for a promotion said "Look, it's no
longer as important to build something really well as it is to
manufacture it at the lowest possible cost, and then have them coming
back to buy a new product every three years or so."

Not all products are like this, of course (Craftsman tools have a
lifetime warranty, for example) and many good products ARE built to
last...but in today's market, there are two very different business
strategies, and both seem to be widely practiced.

Andy Gee said:

I'm guessing it's harder to make a "bad" bike than a good bike. The
engineers all want to design good bikes, workers would rather build
quality stuff than [censored]. You have to work hard to keep quality down.

The engineers can design an excellent bike, and some of the [censored] bikes
are well designed, just not implemented well. For example, you buy a
several year old Shimano deraileur design, except that instead of
machining out of a block of ChroMo Steel you cast the parts in regular
carbon steel, because it's cheaper. For a frame, instead of using
butted Chromaloy tubing, you use straight gauge carbon steel. Of course
you pay the guy in China 25 cents an hour, and put in strict quotas on
the number of pieces that need to be made per hour, if one of those
pieces is substandard, he isn't given the opportunity to care.

That is how you build a bad bike.

W

Rich said:

That all sounds quite interesting, but I'm not sure of the wisdom of
investing in a plan that begins as a "drunken converstation".

Worked for JD Edwards...

--
Robert Uhl <http://public.xdi.org/=ruhl>
It was then I realized how dire my medical situation was. Here I was, a
network admin, unable to leave, and here was someone with a broken network.
And they didn't ask me to fix it. They didn't even try to casually pry a
hint out of me. --Ryan Tucker