Cervelo Cuts The Budget Even More ...
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Cervelo Cuts The Budget Even More ...
So just how bad are Cervelo's finances? One can only wonder. After shuttering their own TdF team and going to co-sponsor, going a long time without launching new models, cutting their online dealers, announcing a huge financing/sale arrangement, a $2,000 fire sale promotion, and now not even co-sponsoring a pro team. How deep does this rabbit hole go?
https://velonews.competitor.com/2012/...rracuda_203253
https://velonews.competitor.com/2012/...rracuda_203253
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They sold themselves to another company (in mid December). The $2000 "fire sale" was to reduce the cost of that sale.
The mistake they made with the "fire sale" was pissing off their sellers. LBS were forced to sell below there cost (for in stock items) bicycles they had no trouble selling for list price!
The mistake they made with the "fire sale" was pissing off their sellers. LBS were forced to sell below there cost (for in stock items) bicycles they had no trouble selling for list price!
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Our local shop stopped carrying them due to all the "rules" that Cervelo imposed.
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What will become of Cervelo Man?
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For a second I thought ye olde Barracuda bike company was resurrected.
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You omitted pushing Gerard Vroomen out of the CEO office and pulling the plug on "Beyond the Peleton".
#7
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How they managed to lose money despite having some of the most ludicrous pricing in the industry is beyond me. They have a gold-standard brand in cycling (and brand is often everything in high end bikes) and they seems to be trying to do everything possible to damage their brand.
On second thought, maybe it's obvious what happened here: questionable quality, losing the companies chief leadership, pissing off dealers and allowing your product line to stagnate is not a successful business plan.
On second thought, maybe it's obvious what happened here: questionable quality, losing the companies chief leadership, pissing off dealers and allowing your product line to stagnate is not a successful business plan.
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#10
Professional Fuss-Budget
I believe the proper term is, "speculate."
AFAIK Cervelo is a private company, which means they are not required to disclose financial statements to the public.
They could be suffering slow sales due to the recession, they could be doing very well and looking for funding to expand, they might believe they'd get better economies of scale by being part of a larger company that owns several bike brands, the owners might just like the deal.
No one has a "TdF" team. It's a pro cycling team.
Sponsorships change all the time in pro cycling, by the way. It's not a surprise for them to dial back to just supplying bikes; it's not quite as much exposure, but it's close, and probably much less expensive.
They announced the S5 in mid 2011, which is -- according to them, at least -- a big change in aero road bikes.
Specialized and Scott took years to develop and offer aero road bikes, which theoretically speaking, aren't as aero as the S5.
In the absolute worst case scenario, it sounds like they'd get bought out by Pon.
Consider Cannondale, which for many years has put out a wide variety of bikes of generally good quality. They decided to get into motorcycles, and it nearly destroyed the company. They wound up being bought and sold a few times, and are now owned by a fairly large company (Doral). Despite moving some frame production to Asia, overall the quality of bikes is as good as ever, and people are still very enthusiastic about their aluminum and carbon bikes.
AFAIK Cervelo is a private company, which means they are not required to disclose financial statements to the public.
They could be suffering slow sales due to the recession, they could be doing very well and looking for funding to expand, they might believe they'd get better economies of scale by being part of a larger company that owns several bike brands, the owners might just like the deal.
Originally Posted by ColorChange
After shuttering their own TdF team and going to co-sponsor
Sponsorships change all the time in pro cycling, by the way. It's not a surprise for them to dial back to just supplying bikes; it's not quite as much exposure, but it's close, and probably much less expensive.
Originally Posted by ColorChange
going a long time without launching new models
Specialized and Scott took years to develop and offer aero road bikes, which theoretically speaking, aren't as aero as the S5.
Originally Posted by ColorChange
How deep does this rabbit hole go?
Consider Cannondale, which for many years has put out a wide variety of bikes of generally good quality. They decided to get into motorcycles, and it nearly destroyed the company. They wound up being bought and sold a few times, and are now owned by a fairly large company (Doral). Despite moving some frame production to Asia, overall the quality of bikes is as good as ever, and people are still very enthusiastic about their aluminum and carbon bikes.
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My thought exactly. Another cost cutting measure. Hey, I know it ain't cheap to put on video production, but that was an epic series about the company/team. So well done. I miss it.
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Ummm....wut?
Scott has been working on the foil for quite sometime now. The market is demanding it, so they built it.
Next, nobody has shown in a head to head wind tunnel test which is more aero. Only the Foil has been compared to the S2 (S5 not around to compare or they would have certainly) and AR1.
Particularly when the air starts to get sideways, and you put a rider on top, the Foil is the more aero of the S2/AR1.
S5? Who knows. Apparently Cervelo, plus the cost of doing wind tunnel tests, has not led to any head-to-head battles. Along with the Venge, this would be a great 3-day comparison I want to see.
Oh...my two cents. The owners are jumping ship with a big payday and selling out. It's the American capitalist way. Build/develop and product/business, make money and value, then have a big company snatch you up. Walk away with your $50-100 million or whatever...and move on with your life, do some cosulting work or something. Go skiing.
When the finances aren't adding up, and you need capital and reorganization, sometimes it is better to jump ship, or have somebody take over.
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I don't believe their funding relationship with Slipstream (the company that runs the team) is changing at all. I don't believe they were actual co-sponsors last year either, and were placed on the jersey at Vaughter's discretion.
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#17
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Oh...my two cents. The owners are jumping ship with a big payday and selling out. It's the American capitalist way. Build/develop and product/business, make money and value, then have a big company snatch you up. Walk away with your $50-100 million or whatever...and move on with your life, do some cosulting work or something. Go skiing.
When the finances aren't adding up, and you need capital and reorganization, sometimes it is better to jump ship, or have somebody take over.
When the finances aren't adding up, and you need capital and reorganization, sometimes it is better to jump ship, or have somebody take over.
#18
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Saw this the other day and found it interesting. CC's take on Cervelo.
"This year also brought the apparent near-demise of another fabulous brand, Cervélo. Given the taut language and yuletide timing of its announcement of a financing agreement with PON, it's easy to imagine the tightening of the company's financial noose. It's not difficult to do a post-mortem on the rise and decline of Cervélo. Two engineers start a company, they get fully consumed by innovating and growing it like mad. Then they commit to an all-in marketing effort by establishing a world-class bike race team, the Cervélo Test Team. Managing and funding the team becomes an additional all-consuming thing within a scrappy start-up environment where conceivably one all-consuming thing, the business itself, was already too much.
Cervélo shut down all online sales channels about 18 months ago. Nevertheless, we stayed friendly with nearly everyone there. It was a telling sign that nearly every Cervélo veteran left the company during that period, including one of the founders. In another telling phenomenon, the pace of product innovation noticeably slowed. The launch of the S5 in 2011 was its first well-executed product release in nearly three years. (Let me preempt here anyone who might suggest that the 2009 unveiling of the P4 was anything but a trainwreck.)
The rise and fall, however, may be followed by redemption. History suggests that the likely acquisition of Cervélo by PON will be the best thing that could happen to the brand. Specialized went through a similar period of financial terror back in 2001 when it reportedly sold a 19 percent stake to Merida, a Taiwanese bike manufacturer. And Cannondale went through emergency financing then bankruptcy back in 2003 before being turned around by Pegasus, then sold to Dorel four years ago. In the time since, growth in financial value, prestige, and mindshare of those two brands has been enormous.
Cervélo is first and foremost an engineering company. In most entrepreneurial endeavors, the worst possible situation is one in which the founder has to obsess over finance instead of creative vision. Assuming that Phil White stays on to re-energize Cervélo and resumes the role of engineer-in-chief, it will once again be a force to be reckoned with by 2014 or so.
The most underrated reality in business is how hard it is to build a great brand. All the financial backing in the world can't buy a company the sort of lustworthiness Cervélo had in its golden era from 2006 to 2009. With solid financial backing the company can leverage that brand power to reach all-new heights. PON scored big, and the management of Cervélo should now be set free to actualize Phil White's vision."
"This year also brought the apparent near-demise of another fabulous brand, Cervélo. Given the taut language and yuletide timing of its announcement of a financing agreement with PON, it's easy to imagine the tightening of the company's financial noose. It's not difficult to do a post-mortem on the rise and decline of Cervélo. Two engineers start a company, they get fully consumed by innovating and growing it like mad. Then they commit to an all-in marketing effort by establishing a world-class bike race team, the Cervélo Test Team. Managing and funding the team becomes an additional all-consuming thing within a scrappy start-up environment where conceivably one all-consuming thing, the business itself, was already too much.
Cervélo shut down all online sales channels about 18 months ago. Nevertheless, we stayed friendly with nearly everyone there. It was a telling sign that nearly every Cervélo veteran left the company during that period, including one of the founders. In another telling phenomenon, the pace of product innovation noticeably slowed. The launch of the S5 in 2011 was its first well-executed product release in nearly three years. (Let me preempt here anyone who might suggest that the 2009 unveiling of the P4 was anything but a trainwreck.)
The rise and fall, however, may be followed by redemption. History suggests that the likely acquisition of Cervélo by PON will be the best thing that could happen to the brand. Specialized went through a similar period of financial terror back in 2001 when it reportedly sold a 19 percent stake to Merida, a Taiwanese bike manufacturer. And Cannondale went through emergency financing then bankruptcy back in 2003 before being turned around by Pegasus, then sold to Dorel four years ago. In the time since, growth in financial value, prestige, and mindshare of those two brands has been enormous.
Cervélo is first and foremost an engineering company. In most entrepreneurial endeavors, the worst possible situation is one in which the founder has to obsess over finance instead of creative vision. Assuming that Phil White stays on to re-energize Cervélo and resumes the role of engineer-in-chief, it will once again be a force to be reckoned with by 2014 or so.
The most underrated reality in business is how hard it is to build a great brand. All the financial backing in the world can't buy a company the sort of lustworthiness Cervélo had in its golden era from 2006 to 2009. With solid financial backing the company can leverage that brand power to reach all-new heights. PON scored big, and the management of Cervélo should now be set free to actualize Phil White's vision."
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The local shop that carry Cervelo is letting go soon, the owner is not happy with current finish work on there models. Some customers have returned ordered frames sets that were not up to past quality standards.
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You're right. The whole Barracuda thing has nothing to do with Cervelo. Cervelo had already made the decision to scale back on pro sponsorship a long time ago. This is more good news for Vaughters that he found a new sponsor after the whole Big Mat thing fell through than anything else.
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1. financing agreement leaked
2. $2000 blowout essentially coinciding with the potential buy out news
3. cervelo test team folds after 2009 season due to lack of funds
4. cervelo loses title sponsor status of garmin cervelo after 2011 season
5. thor hushovd complains that he was not paid bonus by garmin cervelo
6. garmin cervelo late to land uci pro tour license approval for 2012 season
a lot of smoke for there not to be fire, imho. still, cervelo is a great company with some fantastic bikes.
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If you want to make money from a business you start then you sell it. Either by bringing in private equity, selling to a competitor, selling to a conglomerate, or going public. But you sell the company.