Steinway has been around for over 150 years and is synonymous with the world’s best concert grand pianos. Setting aside being the “best” as a matter of personal preference, majority of the world’s major concert halls and venues still use Steinways.
And on the business side, Steinway would seem to be an appealing candidate for a takeover or a merger. They are in talks of selling their band instruments division (brass instruments, woodwinds etc.) that will allow the company to focus on its mainstay—pianos. “Steinway will look like a very cheap stock in relation to sales, earnings or its brand name. And it may prove an attractive takeover target” (SmartMoney, 2012).
Last year, 2011, Steinway took $216 million in revenue and $77 million in gross profits- an increase from $64 million in 2010. Michael Sweeney, CEO of Steinway Musical Instruments Inc. also says on the second quarter results of 2012 (as reported in the NYSE: LVB) “We are pleased with our overall results. We saw substantial improvements in our manufacturing operations worldwide, leading to increased gross margins. Higher gross profit, along with tight control over operating expenses and lower interest expense, resulted in a substantial increase in net income for the quarter.”
In other words, they seem to be doing pretty well considering the negative economic climate that is the majority’s sentiment today. Steinway’s strategy also seems to fit more with luxury brands than music instrument brands; while Steinway’s more mainstream and affordable Boston and Essex pianos account for 3/4 of the pianos sold last year, the high-end Steinway pianos accounted for almost 80% of the piano sales last year. Last year 2,100 Steinways were sold for an average of $85,000.
(Photo below L-R: Steinway, Boston & Essex pianos)
In addition, last year while Steinway’s sales in Europe and the Americas decreased, Asia-Pacific sales increased by 3% and China had a 17% increase in sales. It is important to note that China is now the world’s second largest piano market, but even with these sales, Steinway still has a small share there, perhaps in line with their brand image of catering to exclusive clientele.
Beyond financial figures, and bearing in mind that new brands are extremely difficult to build, Steinway is secure in that has been around since 1853. Steinway expresses that each grand piano they make takes nearly a year to create and nothing is hurried. Perhaps they can afford that luxury of time as well in their business strategy?