Recoton - Defunct Audio Manufacturers
Recoton - Defunct Audio Manufacturers

Beginnings

Company founded in 1936 in New York, USA by ex-Polydor France manager F. Behrendt to import a German phonographic preamplifier and shortly thereafter started importing European phonograph stylii and record needles, the outbreak of war in 1939 meant that the company had to turn to domestic suppliers to survive and in 1952 it bought the Eldeen Manufacturing Corp. and changed from a distributor into a manufacturer overnight. That same year Mr. Behrendt sold the company to Herbert. H. Borchardt who had been employed by the company since 1943 and he added his son Robert L. Borchardt to the board in 1961.

Despite the change in ownership Recoton continued as a specialised supplier of stylii and replacement pickups (supplied by Goldring) until 1968 when it decided to diversify by entering the audio accessories business in anticipation of the company going public the year after, unlike their previous products most of their accessories were bought in from OEM's rather than being in-house designs or productions. Until 1976 the company was mostly active in the phonographic sector of the industry but it started diversifying further in 1976 when it acquired Tape Services although it did bolster its standing in the Phonographic sector in 1980 when it acquired the phonograph related business assets of Fidelitone and in 1988 when it bought some of the assets of Transcriber Inc..

By 1976 Robert Borchart had taken over the presidency of the company from his father and he initiated an aggressive expansion strategy that initially saw the company move into other businesses in the early 80's such as the video and phone accessories markets, expansion into other markets with the establishment in 1987 of Recoton Canada as a joint venture, but while the company was very well known in the USA and during its last years probably the best known supplier of audio accessories over there and had by the time the Canadian operation was started a turnover of more than 30 million USD (which may not sound as much but it is massive for an accessories marketer, especially at the time) it was almost completely unknown outside the USA and expanding into other markets and countries probably the only option left for the company as far as sizeable future growth was concerned in that market sector. Hereto the company had also used the Recoton brand almost exclusively even though it technically owned the rights to a number of others, but from 1988 that changed dramatically when Recoton started buying up companies and brands to an unprecedented degree in the CE accessories business.

Expansion

It started in 1989 by taking over Calibron which supplied budget headphones and similar products and later that year it bought antenna marketer All Channel Products and with it the Rembrandt trademark, the Calibron acquisition was in particular important for the company, not only due to the business that came with the purchase which was mostly OEM and not the direct to retailer that the company was used to but also due to Calibron's large land holdings at Lake Mary in Florida, but not long after the company moved their headquarters over there even though the company continued to be listed in New York.

In 1991 Recoton took over the product lines, some assets and trademarks of antenna manufacturer Parsec and purchased the financially troubled Discwasher company from Ken Thomson, strengthened its standing in the video accessories market by acquiring Ambico in 1992 and that same year made their Canadian subsidiary a wholly owned one. The company entered the mobile phone accessories market in 1993 and bought the assets of Infrared Research Laboratories in 1994 along with the SoleControl brand and Recoton marketed all their universal remote controls under that name thereafter (note that the SoleControl brand name has been seen used both as one word and two, even in Recoton literature), later that same year it also bought the assets of the Sound Quest Inc. company and slowly expanded that brand from a car install and phone accessory brand into a full line car audio name.

In 1995 the company expanded into the computer game accessory business when it acquired STD Holding Limited of Hong Kong but that company marketed its products under the InterAct brand, STD's USA based distribution was rolled off into a new company named InterAct Accessories, Inc., this also lead to expansion into the Asian market for the first time since STD had a good distribution network in place there. Later that same year the company acquired the Ampersand division from Ampco, but that paved the way for Recoton's entry into the car audio installation market, the company also strengthened its position in the low end of the car audio market by creating the Road Gear brand.

From CE accessories into high end loudspeakers

By this time the company was doing between 200 and 300 million USD in sales pr. year, which is not to be sniffed at and this made it one of the largest CE accessories companies in the world, if not the largest, however the rise of the supermarket on one hand and the discount electronics retailer on the other as the main outlets for this market sector was causing problems. While those 2 types of operations typically have a tremendous trading volume and are in some countries responsible for more than 75% of CE accessories sales, the problem is that they will only carry a limited number of brands and product lines, important factor for a company like Recoton which had 3500+ products at the time. Furthermore the close to monopoly position that the biggest chains have with only 3 to 4 really large ones in each market has a tendency to drive down the margins of manufacturers and wholesalers and drives up the margins of the retailer leaving us with wildly profitable retailers but wholesalers that are heavily exposed to market, supply and logistical fluctuations.

In Recoton's case we can read a lot into the carefully worded report that the company gave to the USA Securities and Exchange in 1997 but it states that sales to the Wal-Mart company in the USA counted for a whopping 11 percent of their world-wide business by dollar value, this is after their take-over of Jensen with their large German subsidiary NB, but there is a complete lack of info into the sales volume however which leads me to believe that sales to Wal-Mart were much higher by volume and thus only a tiny part of their profit, this meant that a deteriorating relationship with just that one supplier would leave the company with a large amount of stocks that were not readily disposable of through other channels, in other words the smaller specialised dealers were simply a much more profitable option for the company than they might appear to be in trading volume alone.

The company's entry into the computer game accessories business with the purchase of STD and with the creation of their own Game Shark brand also coincided with an increased competition in that sector along with a lowering of margins, Recoton's board decided to try to move into more specialised, high margin areas of the business and set their sights on the high-performance loudspeaker market, but in the USA in particular the loudspeaker market is in may way's more similar to the accessories market that it is to the market for hi-fi separates, with loudspeakers being replaced more often than the electronic part of systems, has a higher profit margin and a longer shelf life of products.

In preparation for this move the company founded a new subsidiary corp. called Christie Design Corporation in 1995 that started to design hi-fi loudspeaker products, later that year however the troubled International Jensen company was put up for sale and since their consumer division was in many ways an ideal fit for Recotonís intentions, this lead Recoton's board to halt plans for the introduction of their own speaker line and bid for IJ. This did not go entirely smoothly since they were bidding against Emerson Radio and in the end they had to pay 53 million USB for the company, considerably more than the original intension was. In August 1996 the company took over the consumer division of Jensen including all trademarks and reached an agreement with the former IJ CEO to dispose of the OEM side of Jensen separately.

International Jensen takeover

The take-over of Jensen was a watershed event in Recoton history, first and foremost it bought with it a number of well known USA brands including Advent, AR, Jensen, NHT and Phase Linear, but while some of the brands controlled by Recoton were reasonably well know in the USA they had limited or no recognition outside North America, but even more importantly none of the Jensen brands were associated with the cheap'n'cheerful accessories that people usually correlated with the established Recoton brands. Secondly the Jensen company had the manufacturing facilities and supply lines ready for high end loudspeaker production and thirdly they had very well established marketing channels, not only in the USA but also in Europe, in particular in Italy and Germany were Jensen owned the MacAudio and Magnat companies.

Recoton took most of the manufacturing assets it acquired with the Jensen take-over and integrated them into a separate company called Recoton Audio Corp but the German operations were consolidated into the Recoton German Holdings company which expanded further later that year by taking over the bankrupt Heco loudspeaker manufacturer including their East German manufacturing plant and by introducing a new line of high end car audio products under the Phase Linear brand that had not been used for a few years under Jensens ownership.

The company also bought much of the assets of Capa Industries in late 1996, in Feb. 1997 it took over Tambalan Ltd. in the UK which traded under the Ross name and with it gained for the first time European and Asian distribution channels for their core audio accessories products, AAMP of Florida was then taken over in November of that same year and with it the Stinger, Best Kits and Peripheral car audio brands. In 1998 the company licensed the Rolling Stone and Sprint brands for use on their accessories products and the NMB brand in 1999 for use on AV loudspeaker products, and licensed the NHT trademark that it had aquired from Jensen to Vergence Technology.

Demise

Recoton was by now a full line producer or marketer in the CE accessories, car audio and loudspeaker markets and sales peaked in 1999 at just over 710 million USD, although it was operating at a small loss due to some expensive financing arrangements it had entered into due to the large number of take-overs it had performed in the years prior. To counteract this the company signed a new credit facility in 2000 which enabled them to pay off older and smaller loans and this shrunk their interest payments significantly, however this coincided with a small fall in sales in both 2000 and 2001 mostly due to cooling of the games console market which forced the company to do minor reorganisation in their USA and Asian operations. In 2002 however sales tumbled, the operating loss for the year was over 134 million USD and despite a serious reorganisation in late 2002 and early 2003 including divesture of a large amount of assets including the sale of Now Hear This (NHT) to Rockford, AAMP of America, Sound Quest, Stinger and Pheripheral brands and product lines to a venture capitalist company called ICV Capital Partners (later sold to "Audax Group") and the GameShark brand to Mad Catz Interactive, the company was forced into Chapter 11 bankruptcy protection in April 2003 and into full bankruptcy proceedings just a few days later.

The car and home audio side of the business was auctioned off to Audiovox for 40 million USD including brand names such as Road Gear and Phase Linear and the profitable Recoton DE group which included Heco, Magnat and Mac Audio divisions along with the Phase Evoluton brand. The accessories side of the business however went to Thomson for 60 million USD, that included the full rights to the Ambico, SpikeMaster and Dishwasher brands. The rights to the Advent, Jensen and Acoustic Research brands and products lines were split between Thomson who got the rights to use them on accessories and Audiovox who has the rights to use them on loudspeakers and electronic products.

The manufacturing part of Recoton, i.e. the capacity inherited from Jensen and Teledyne Acoustic Research was not purchased by anyone and was liquidated. All the brands that Thomson bought from Recoton were sold to Audiovox when the latter company purchased the consumer electronics accessories division of Thomson in 2007.

Spares & service : For parts and repairs of loudspeakers made by Recoton contact Layne Audio (Grey sidebar)

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The site was last compiled on Sun Nov 10 2013 at 9:15:00am