"Billabong reduces the value of its brand to zero" is a surprise headline on
today's BBC website. Not because this blogger was expecting to make thumping profit -- which he wasn't -- but because the Billabong brand seemed to him to be the only bit of the business that was worth salvaging on account of its actual and/or potential pulling power in markets beyond Europe and the US. States the article, in relevant part:
"The Australian surfwear brand Billabong has reported much worse than expected results as it continues to try to refinance its debt. It reported a net loss of A$859.5m ($777.8m; £495.1m) for the year ending 30 June, compared with a loss of A$275.6m a year ago. It has written off the value of many of its brands, including cutting the value of the Billabong brand to zero. Its shares fell as much as 15%, having lost more than 60% in the past year.
Billabong has been struggling to maintain sales in key markets such as the US and Europe. ... The firm has also been in financial trouble after an international expansion loaded the company with debt [same old story -- undercapitalised, borrrows too much too fast and then chokes -- but a fresh twist, in that money is currently so cheap and has been for the past five years, coinciding with the company's expansion].
... It has closed 158 of the stores it describes as under-performing, sold the DaKine brand [that looked a good deal, clawing back $70 million on a brand lurking somewhere between niche and nonentity] and all but withdrawn from its Nixon joint venture ...".
Whatever the reason, if not that the brand is actually and genuinely worthless, this old-fashioned and impractically idealistic blogger remains uncomfortable at the valuation of an intellectual asset at zero. What do other readers feel?
