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Smith & Wesson Holding Corporation Message Board

  • mardermj mardermj Nov 7, 2013 7:16 AM Flag

    RGR has expanded internally, it's smarter and easier to acquire a going concern SWHC

    Those RGR mini manufacturing sites took too long, they add capability but must be met with more demand from the existing demand pool.

    Why try to pull more AWAY from a competitor, It's easier, less risky, and smarter to acquire and ABSORB SWHC and its market.

    a. No increase in demand required, it reduces competition and is accretive instantly within the same demand pool.

    b. It allows the two firms to become more efficient, over time.

    See how that works?

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    • They don't really have to be met with more demand because they can (and have been) terminate some of their existing investment casting contracts which are low margin and use the mills to make their own castings, some of which they were having done by outside vendors, and that is a much much higher margin proposition.

    • You are mostly right. SW is sort of a one trick pony with its M&p line
      After m&p, it falls off pretty rapidly. The Thompson stuff is an oddball compared to the up and coming Ruger American series, it just is. smiths Ar might serve to offset Rugers 556 and 762
      The revolvers need to get blended together, rationalized. Face it, revolvers are fun, but pistols are it. Revolvers will have a place, but combining manufacturing and marketing will improve profitability of both companies.

      Lastly, SW is in a eat or be eaten situation. They suck badly at acquisitions and integration. Their management sucks badly. SW should not initiate any meaningful transactions. That said, when the gun furor tapers off, SW shareholders will suffer with another decline in stock price. Just face it: Ruger ops was rewarded because the market liked the management. SW management on the other hand is screwed up. They were more concerned with cashing in than shareholder value. Golden, the prime architect of two disastrous acquisitions, still has thousands and hundreds of options to cash in. What is so painfulabout this buyback is the repurchased shares are those printed off for a failed acquisition. So only now has the devastating effect of stupid decisions is felt: the company SW is using once in a lifetime Obama windfalls to pay for a failed transaction of many years ago.

      The SW board should immediately initiate an investigation into the advisors and brokers of the security company acquisition. It is their fiduciary responsibility to do so. I fear they are intentionally avoiding doing so as the finger of blame will come back at them.

 
SWHC
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