This was just posted on the C14 users group. Patrick -------- Original Message -------- Friday, April 1, 2005 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. 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. ------------------------ Yahoo! Groups Sponsor --------------------~--> Has someone you know been affected by illness or disease? Network for Good is THE place to support health awareness efforts! http://us.click.yahoo.com/RzSHvD/UOnJAA/79vVAA/o_XolB/TM --------------------------------------------------------------------~-> Should you wish to unsubscribe from this mailing list, please send an email to C14-unsubscribe@yahoogroups.com Yahoo! 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