Audio Research in Receivership.

@grislybutter     A billion bucks of speaker sales last year. So, in toto, about 5 pairs each of Magico M9s and Wilson Chronosonics then.

Way back in the late 90s an iconic German sport car manufacturer realized they couldn't survive making only two seater sports car.  They needed to make a vehicle that had mass appeal and that was the genesis of the Porsche SUV.  SUV models now account for 63% of Porsche sales.

ARC needs to come up with products that have mass appeal if they wish to survive long term.  They need to expand beyond their niche while still keeping their existing customer base.  A difficult task, but not impossible.

The number of US brands at European dealers today is negligible, the opposite of true about European brands at US dealers.

I can see how ARC appeals to the older generation and a very wealthy segment of it, and how other, mostly Scandinavian brands figured out the formula to find a much broader audience.

Since the market for high end gear is world wide, and not just limited to a certain demographic and location, that would seem to be what has been holding up the industry. 

However, ARC has some serious competition due to this world wide market, more so than ever before in the past. When ARC was in their heyday ( which IMO was in the mid 80's to the late 90's), they had the US market far more to themselves than today, and they had a decent exposure in Europe as well. This situation applies to many other well known high end US audio companies today, which makes me question who is going down next, unfortunately. It would seem that many of these US companies have been heavily relying on the far east market, question is for how long can that continue?

just the speaker sales alone in high end audio was over a billion dollars last year. It's easy to fail with any business but it's not for the lack of buyers

well said @ghasley 

hit nail on head on all counts

For so long the Gold Standard. Very sad. Hope they pull through.

@4afsanakhan 

Example of a successful brand bridging the gap; Technics (by Panasonic).

“I’m going to cross shop Technics, Devialet and Audio Research” said no one, ever. In the history of the world.

Listen, you and I can agree to disagree on the semantics of what is or isn’t high end. ARC products or even pricing wasn’t the problem. Strategic blunders by the most recent leadership, financial mismanagement and a crippling debt load each contributed to a viable business stumbling. ARC will come out the other side just fine and refocus its efforts on what its good at building. I see many here on Audiogon talk about the high end market shrinking….the fact is that the high end has never been better. Companies come and go in every industry.

I also tire of reading how bad the economy is, how there is no disposable income, how every audiophile and audio show is populated by predoninantly old men. But that was true 20 years ago and yet, here we are coming off the two best years high end audio has experienced in a couple of generations. Obviously the older generation continues to be replaced with the next generation of older consumers. There has never been a time in this hobby where there was a broader, deeper and better set of gear from which to choose. Young people today are diving in to vinyl, enjoying the interactive, tactile hifi experience.

The European Brands seem to have a leg up on the iconic American brands when it comes to new technology in 2 channel hi- fi. They are the "innovators"....the Chinese companies on the other hand are the "best bang for the buck" suppliers.......the American companies are the "brands we grew up with" suppliers not necessarily the best innovators or the best "value".........Having said that , it’s good to support American companies but becoming harder and harder as fresh new products are introduced by the Europeans and Chinese that just sound fantastic . I do notice that the show crowds seem to be getting older and older.....not a good sign for 2 channel.

One problem with I50 and some others is you cant tube roll easily. Thats a big knock.  Audio Research had 3 dealers within 30 minutes of me over the last 5 years or so.  They've ALL been stripped of the ARC brand because they didnt sell enough units.  It wasnt the dealers choice to have the brand removed.

@Mr_Bill, thanks for the heads up! Indeed, the 50 series looks fascinating and in my opinion the right product to go to market with. Next, great marketing to reach Millennials with extra cash to get their first really nice system. If I was in product development for ARC, I would have included a high quality DAC/ streamer / phono stage for an extra 2k rounding it out to around 5.5k. Its just about affordable enough for younger folks with moderately decent disposable income and would represent a far larger market with which to drive sales. 
 

ARC should not give up, but go all in on this one more time - forget uber high-end focus for the immediate present.

I don't know why their amps look like a cheap Kenmore oven. For this much money, couldn't they look nice(r)?

I know, it's subjective mostly, the sound matters a 50 times more

@ghasley, if you will pardon my saying so, sales is always the problem. One would have to think that the requisite number of sales to service the debt, then generate a working profit, was not attained, likely over a period of years. The challenge for ‘high-end’ companies is finding enough wealthy customers with sufficient disposable income to support the increasingly stratospheric pricing structure. Audio Research must have had difficulty in appealing to enough of these customers.

Example of a successful brand bridging the gap; Technics (by Panasonic).

Let us qualify affordable. I did not intend to say generic lower end hifi, but more upper tier that is still affordable by ‘the masses’ as you put it. Let’s take another example, Devialet. Their Expert Pro 220 offers a decent enough streamer compatible with Qobuz, Apple Music, Spotify etc., a terrific DAC, a superb amp / preamp, and to crown it off, a truely superb phono stage. All this for 10k. Are there better, yes. Are they 20k 30k 40k and more better, decidedly not. Iconic brands such as Audio Research, McIntosh, Conrad Johnson, and Mark Levinson are experiencing stiff competition from European and Asian brands. The question is how many can hang on if the uber high-end market shrinks further?

@4afsanakhan I think that’s what they were trying to do with the new 50 series.

@4afsanakhan I have been led to believe that sales wasn’t the problem, it was top end overhead and debt service. Oh, and there isnt a viable business model building gear in America for the market segment you described above. The dealer network, the loyal dealer network, isn’t built to sell affordable to the masses boxes. It isn’t worth the trouble and doesn’t align with the brand equity.

That is very sad news. Second piece of sad new I received today ( a dear friend passed away a day after back surgery). I believe that Audio Research could have revived their brand, by appealing to the average income audiophile. Those that can afford a whole system around Audio Research’s latest product line are not many. That choice inevitably means running into very stiff competition from brands that are dominant. It would have been interesting to see Audio Research design products for the market to compete with more affordable brands.

Why would audio research be owing money too so many dealers?

is it due to returns of unsold merchandise to AR for which dealers were waiting payment on?

@hickamore You can’t generalize like that.  There have been several excellent brands that have been rescued and continue to innovate and produce quality products.  Like I said before, it all depends on who buys them.  

@ronboco @soix  Private Equity doesn't give a f****** s*** about Brand Equity -- preserving it, that is. They will fake a savior pose, as they always do, while draining everything for asset value. What wealthy, generous, public-spirited, devoted audiophile with management skill is gonna outbid the bloodsuckers? I always felt that ARC was the industry flagship, and if That One ever went belly-up, it would mean game over. Please, Athena, prove me wrong and transform the Erinyes.

ARC is an iconic American brand. My biggest fear is that someone might buy it and only focus on capitalizing the brand name at the expense of everything else that was responsible for giving ARC near-legendary status. I won't be surprised if most of production is moved overseas with only final assembly taking place in the U.S. so they can continue to milk the US heritage. Many iconic brands of yesteryears have faced similar fate. 

Very sad.  I’d like to think there’s enough brand equity built up in ARC that someone reputable could see value in simply providing better management.  But, it really all comes down to who buys them.  There are several success stories where an acquirer didn’t mess up the “secret sauce” of a company and it successfully goes on, but there are others — Thiel comes to mind — where it was completely mishandled and a miserable failure.  In this case I sincerely hope this follows the former as it would be a big loss for the audio community at large to lose a company, and its products, of this stature.

My money is on the post in the other thread that says the new owners will bleed the company dry then dump it. So much greed and don’t give a s*** what happens to anyone in this world. 

My comment about 2-chanel sales being way down was from a source that sells Sonus Faber, McIntosh and other high-end equipment. He had nothing to gain from telling me what he is hearing in dealer meetings and experiencing even in the "white-hot" home real estate market in DFW. While there may be a backlog of orders, they’re not getting replaced with new ones. Why else would Audio Advice recently run a sale on Anthem 8k AVMs and AVRs (yes I know, it’s not the same level as AR) that were really hard to find a year ago? We can thank our "overlords" for pumping all that cheap $ into the economy that is now much more restricted. Yes it was hearsay, but it is from a reliable source.

As we know from Dutch tulips to the U.S. stock market to bank runs, consumer expectation tends to outrun economic reality. I'm hearing signs of "two channel audio paradigm" panic. In this environment, how sensible is it to hoard one's pennies for that esoteric component whose mfr may go broke in six months; which one's heirs won't want; and which and one's executor will find no market to sell in? I mean limited-budget hobbyists like myself, not the gazillionaires whose $1.5M systems represent only pocket change and who inhabit a global oligarch economy immune from the policies or economies of nations.

@ghasley we manufacture audio components so we are pretty much in tune to what goes on in the industry.  Know many reviewers, many distributers, companies, etc.   And yes we can fix repair upgrade built anything audio.  So we offer our assistance to everyone and have our listening room in northern NJ open to everyone. We are not dealers 

@waytoomuchstuff 

Or, it could have just been a proper Swan Song for a company that’s been a major contributor to high end audio for generations?

I think it was a proper swan song for Trent...who was likely undercapitalized. ARC as a company and brand will come out the other side a healthy and viable business.

@bigkidz 

Dealers were notified last week.  Most companies fail because of sales. How many units do you think they were selling?  The high end market as we know it is almost completely gone. Counterpoint sold 10,000 units and failed.  Look at the prices of some equipment compared to upgrading those units. Much better to upgrade then to buy new.  That's why we do repairs and upgrades and modifications. The values may drop but the units can be repaired.  Another company may buy them but there is no guarantee they will continue on especially with passion.

I'm not sure your post indicates much knowledge or experience with buying and selling companies. You seem to be quite knowledgable and seem to have the perfect parts upgrade recommendation for virtually every piece of gear that gets mentioned on this forum. Mr. Johnson had his ups and downs with quality and working capital through the years and the quality of today's ARC gear far surpasses much of what is being currently built in the market.

The "high end is almost completely gone as we know it" may be a dead giveaway that you may not have a great deal of in depth knowledge or data on this topic. I speak to a number of top dealers frequently and while they will all agree that things have slowed down a bit from 2021, there are still many manufacturers for whom demand remains brisk and backlogs are still measured in 3-9 months to et something ordered today. Thats still quite healthy.

@rlstx 

Our HT integrator's sales mgr. just told me on Friday that 2 Chanel audio sales are tanking nationwide. HT is still doing okay, but the "listening room" reference system sales are way down.

Well then, it must be true! "Tanking"? whatever....

Looking at the creditor list, like many on this forum, I know several of these people/companies. Some come as a surprise, some not so much. Nonetheless, the one’s that come as a surprise to me are not one’s that most would think would ever be a creditor of ARC.

The high end market as we know it is almost completely gone.

Say what? Based on reports from the shows, it seems that "high-end" is carrying much of the load. And that would be consistent with broader economy, in which the middle-class is being killed (yet again), while the rich continue benefit from inflated assets.

There is no guarantee of anything....

Dealers were notified last week.  Most companies fail because of sales. How many units do you think they were selling?  The high end market as we know it is almost completely gone. Counterpoint sold 10,000 units and failed.  Look at the prices of some equipment compared to upgrading those units. Much better to upgrade then to buy new.  That's why we do repairs and upgrades and modifications. The values may drop but the units can be repaired.  Another company may buy them but there is no guarantee they will continue on especially with passion.

As just one example, my Ref 150 SE which I purchased new in 2017 has a design problem with in-rush current on start-up. It is not a question of if, but when, as to the input fuse blowing and taking the board out with it. The successor 160M, 160S, and 80S implemented a relay-circuit with soft-start.

@fsonicsmith1 There is an inexpensive device called a current inrush limiter that is a kind of thermister. Any technician can install one in minutes. We've been using them for decades. When cold it has a higher resistance; when you turn the amp on, the current thru it causes the resistance to drop as it heats. Very simple and reliable.

I think you are right about the KT150. IMO if you're going to use an amp using hi powered pentode power tubes, the KT88 is still the best option- there are good quality KT88s available from JJ.

In my view a brand with this sort of value will get bought by one of the HiFi aggregator companies that are rapidly buying up many other iconic brands. It won't go away completely, but it will be something very different from what it is today. As someone previously said, it's to be expected with these types of small, closely-held businesses. 

Our HT integrator's sales mgr. just told me on Friday that 2 Chanel audio sales are tanking nationwide. HT is still doing okay, but the "listening room" reference system sales are way down.

A lot of moving parts here. Taking the high ground, ARC may have stood firmly by their origional mission statement and operated as such, long after "the numbers" didn’t align with those objectives.

As far as Axpona is concerned, there may have been opportunities there that were under the radar, such as having the "right" people in the "right" place at the "right" time -- potential buyers of the business? Or, it could have just been a proper Swan Song for a company that’s been a major contributor to high end audio for generations?

Hoping the owners land on their feet, or a the very least, get out of this alive. Some don’t.

I do find it surprising that ARC, facing such financial trouble, would be shelling out $50,000 or more to attend Axpona. I realize they shared expenses with Wadax but after you pay for shipping gear, hotel rooms, entertainment expense, I bet it was 50K easy. Gear does not get sold at Axpona, particularly when you are not showing new product. 

Sounds like they've been under pressure for quite awhile having over 1100 creditors - makes you wonder how much debt they've incurred...

Never cared never liked them never owned

Jim McShane wrote me before the Russia-Ukraine war started that he could not and would not sell KT150's because he had to buy hundred to find five or ten decent tubes. If you look at his website now, he cites to advancing age and refusing to support Russia for his decision to stop selling tubes (which does not make total sense since the New Sensor factory is American owned). But all that said, yes, you can find good ones from Upscale. Everything after Kevin Deal is tough. TC Tubes used to be a reliable source of tubes for me and they no longer sell KT150's. 

It ain’t going anywhere

@fsonicsmith1  while I agree that buying reliable KT 150’s can be a chore, there are some vendors who do sell them and they seem fine. I have had luck with Upscale audio, among others. Buying on eBay is not advised.

Going all- in with KT150’s was a mistake? 

Yes. Have you tried to source reliable KT150's over the last three years? Evidently not. 

this sounds so much like what happens before the collapse. When you have to scream "don't panic!" with a megaphone, panic already consumed everyone. 

If the company ends up being saved, it was a classic communication disaster for sure,

Unfortunately, I agree with @testpilot 

Anyone who is keen to buy an AR product would be well-advised to wait until the dust settles.

Personally, I wouldn't trust any Audio Research Exec's claim that it's business as usual as they "attempt" to secure new ownership.  Why take a risk?  There is only a downside for the consumer at this time.  I wish Audio Research all the best.

Here is a post from someone associated with ARC that was posted on What's Best Forum within the last 45 Minutes. They are presently operating and near a potential new owner agreement according to the below

"Hello, everyone. This is my first post on What's Best because I want you to know what is happening at Audio Research. Some of you know me since I was hire by Bill Johnson at Audio Research in 1989. I left for a few years and returned to ARC in 1996.
We will be posting a statement on the Fans of Audio Research's FB page, and also the company's FB page as this seems the fastest way to get the facts out.
Nathanu's post is correct. What almost no one seems to realize is that Audio Research has been running since the assignment was filed on April 4th, almost four weeks ago. That was a week and a half before AXPONA, where our VP Sales (Allan Haggar) worked with Quintessence Audio (REF10, REFPH10, 160M MkII). We are staffed, with customer service answering the phone, the service department is repairing products, production is building new products, we are receiving parts, our sales department continues to accept orders, and our shipping department is shipping parts and product orders along with service work.
Trent Suggs was relieved of control of Audio Research. We have been working with individuals who want to purchase the company, and I expect that we will have a new owner within the week. There will be continuity as production, engineering, purchasing, service, and critical personnel will remain working for Audio Research. Warren Gehl, too.
I am writing this quickly as there are a lot of things to attend to immediately. Thanks to Mike for sending me this link to this so I could respond."

Eventually you run out of super rich folks to buy your stuff, especially with the large amount of boutique brands at their price point. This is just failing to keep up with the changing marketplace. 

I am on my 3rd AR pre amp and have loved all three. I would hate to see them go, but I really can’t imagine that someone wouldn’t come along and save them from total demise. Maybe Fine Sounds will buy them back, I would imagine that it is not lack of sales but mis management that has caused this 

I hope that someone will at the very least take on the service side of their business.