Vacuum Cleaners Discussions

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/11/04/cndyson104.xml

Results on year to December 2006 :-

• Profits up 19 per cent to £115m
• Sales up 9 per cent to £514.7m
• R&D spend increased, up £20m to £70m

Thanks for the assistance.  I noticed that M00se's post has an article dated March 11, 2007.  Also calendar year 2006 information. 

The dyson sales/financial information, which at one time was issued every 6 months or less, isn't coming as quickly.  Based on past practice, I would have expected estimated dyson sales numbers/financial results for the first 6 months of 2007 no later than the fall of 2007 with full year 2007 results in the spring of 2008.  

With the exception of the dyson sales puffing regarding the success of the DDM canister in Japan and official dyson pronouncements that sales of the DC16 hand held have exceeded expectations, nothing concrete has come out of dyson for its product sales for 2007.  NPD issued some nebulous unsupported sales percentages through US News and World Report magazine in April 2007 for quarter 1 2007.  These numbers were sketchy at best.  I followed up several times by email with both sources [NPD and US News and World Report] asking for specifics and more details.  But I never got responses from either. 

We'll have to wait and see how well dyson fared in 2007.

I also recall many months ago that the local UK governmental authorities nixed dyson's planned Engineering school.  And dyson was looking for another UK location.  But, no word yet on where and/or when.

Carmine D.

CarmineD wrote:

 I remember reading that competing application (Dyson was one of two) for the site fell through so Dyson is now back in the frame.

Hello M00seUK:

If I recall correctly, maybe not, the nix on dyson's school at the particular location of interest in the UK was due to environmental issues and concerns by the local governmental authorities.  Are these things that dyson and the locals can resolve mutually and/or deal breakers?

Carmine D.

Apparently, poor consumer spending, tanking housing market, credit crunch, and weak and failing financial institutions are not limited to the USA.  Europe, Japan, and the UK are experiencing the worse economic downtown in recent years, from what I read. 

Here in the USA, the threat of the "R" word has gotten so bad, the Fed Chairman, Ben Bernanke, made a very public official announcement yesterday that the Federal Reserve will lower rates to stimulate the US economy.  Probably in response to the rumors that a key interest rate in the UK may be dropped one whole point [sounds like a drastic move].  And this being an election year in the US too.

Maybe these above facts and circumstances are the reason, in part, dyson has been silent and absent in the news about its financial results.  First time in 5 years that dyson has not been very public and outspoken about the success and sales of dyson vacuums.  Is the "honeymoon" over?  Have to wait and see.

Carmine D.

With high interest rates and consumer spending at a low surely anywhere US, Europe and the UK this will hit most businesses if consumers are not spending including Dyson!  This does not mean or indicate 'honeymoon' period is over!?  Consumer are just watching what they spend at present.  Once interest rates are lowered etc the consumer will start to slowly spend again!

DC18

Is the honeymoon over?  Hardly.

.

Dyson is a widget man first and vacuum man second.  Dyson is an inventor by nature and so expect better vacuum widgets and non vacuum widgets (presumably).        DIB

Let's recap the last 5 years for dyson so there is a valid frame of reference for comparisons.

If my memory serves me correctly, this is a financial data synopsis for dyson. 

In the first full year of dyson sales in the USA [2003], dyson captured about 10 percent of the market of new vacuum sales by dollars.  Not the best indicator for vacuum sales and not the industry standard, which typically measures units sold, not dollars.  But this is the matrix dyson used for publicity, so I'll stick with it.

Over the subsequent 3 calendar years, the dollar volume of dyson sales by market share climbed, along with the new prices of the dyson vacuums.  By 2006 dyson claimed about 20 percent of the market share in new vacuums by dollar sales volume. 

In April 2007, the last date for which the vacuum Forums posted dyson supplied financial data, a sales chart published in the US News and World Report magazine and provided by NPD showed percentages of market share for vacuums for the first quarter of calendar year 2007.  According to the NPD source, dyson claimed about 24 percent.  But the information was unclear, nebulous and uncertain.  When I asked both sources [US News and World Report and NPD] to validate the facts and assumptions supporting the data neither did.  US News and World Report referred me to NPD and NPD did not answer my emails.  3 months worth of data, even if it could be validated for accuracy by the sources, is meaningless and useless.

Dyson vacuum market share by sales volume in the UK declined from 2004 to 2005 by almost 7 percentage points.  In 2004, dyson claimed a 42 percent share of UK vacuums by sales volume.  In 2005 the percentage dropped to 35.  This was the year of the infamous dyson contra rotating washer which industry sources said amounted to 1900 units before returns.  Dyson countered with 5000 as the number.  But when asked to validate the number, dyson was conspicuously silent.  But dyson was disturbed by the decrease in market share of vacuums in the UK.  And, no further dyson data for vacuums in the UK was provided in subsequent years that I am aware of [at least on the vacuum Forums].

Please fill in any gaps and/or add clarification.

There is a huge caveat with all the above data.  Dyson is privately held and is not required to disclose publicly its results of financial operations as most vacuum companies are.  The above dyson data is "unaudited" by an independent authoritative source for accuracy and validity.  It is supplied and verified solely by dyson insiders.

Carmine D.

I'll just say that Dyson had a tremendous 2007..............   

CarmineD wrote: 

My personal indicator for judging Dyson's successes would be how much value by way of new inventions they can add to their moulded plastic / twisted metal components, the implied benefits and how much they can convince people to pay for the end result. Units sold comparisons are generally meaningless in all premium goods sectors that I can think of, unless you're directly comparing with products of the same selling price.

CarmineD wrote:
I'm not sure of the finer details - Google News search is proving a pain to use at the moment. I understand that they still needed to address the concerns as before and that there was a public consultation in March of last year.

Hello M00seUK:

You're perspective on personal product and company success is very different than financial success.  But welcome.  I like to see the numbers myself. 

Carmine D.

CarmineD wrote:
T'is true. If Dyson was a public quoted company, I'd agree that the financials would be different.

CarmineD wrote:
FLOOD TESTS AT DYSON SITE

Thanks M00seUK.

Reading the locals' comments about Sir Jaydee's school plans and geographic location and about the new generation of vacuums is very insightful.   

I'd have to say based on these select few comments that the honey moon period for dyson in the UK is certainly over.  The billionaire business man is no longer viewed as the little guy with an idea who makes good.

Carmine D.

Here is a synopsis of dyson sales and profit for 2007 according to a reliable source:

Total sales in dollars: $1 Billion

Net profit after taxes: $64 Million

Increase in sales for 2007 over 2006: 10 percent

Carmine D.

CarmineD wrote:

I believe you rang the death knell for Dyson by 2007.  What happened?

HARDSELL wrote:

Hello HARDSELL:

Good question.  If the 2007 results I posted are valid [I believe the source is very reliable], it appears there are erroneous/contradictory financial results and sales data reported here recently for dyson.  What happened?  Is the difference the phenomenon of inventory on hand vice actual sales to customers?  Seems like a very high inventory on hand which is entirely possible seeing DC07,14 and 15 models still advertised and sold. But I sincerely doubt, since dyson counts shipments to retailers as sales [which would include end of year dyson retailers' inventory on hand and unsold].   

It appears from the data I posted that the 2 Million dyson units [approximately] are worldwide and not in the USA, as previously reported.  [At $1B in sales using an average sale price per dyson vacuum of $500 the result is 2 million].  Don't know if the $140,000 in AirBlade sales are included in the $1B sales amount.  Factoring in the percent of USA sales only, then the dyson vacuum market share in the USA [by units] is reduced from the 10 percent recently posted [according to NPD we were told], to probably 4-5 percent of total unit sales for 2007 in the USA.  That's seems reasonable and unimpressive unless quoted in dollar terms.

Carmine D.

CarmineD wrote:

Uninpressive as far as units sold.  Coulld it be that the standard measure of counting units sold as success is out dated.  Profits are impressive and more important.  I thought you might have learned that when Hoover folded. 

HARDSELL wrote:

Well HARDSELL, not sure about all that you say.  Doing the math, jaydee is netting $32 profit per dyson sold.  Seems to me that $50 retail mark up on the new HOOVER WT is looking better by at least $16 more per vacuum. 

Carmine D.

CarmineD wrote:

The reason for the difference is wholesale and retail.  My calculation is based on retail sales.  Dyson's data are based on wholesale prices to retailers.  The 2 Million dyson units sold in the USA [as told per the NPD] is based on wholesale prices to retailers not retail prices to customers.  What does that mean?  It means a retailer is making about $250 per dyson [based on an average retail price of $500 per dyson] before paying overhead and operating expenses.  Not too shabby even when they offer 10-20 percent and more off, the profit margins for the retailers is huge.

Carmine D.

CarmineD wrote:

Well, HARDSELL based on my previous post let's recalculate dyson's net profit per vacuum based on an average wholesale cost per dyson to the retailer of $250.  Now the units sold at wholesale based on $1B of annual sales is 4 million units.  Doing the math, dyson nets $16 profit per new dyson sold.  Retailers are probably doing better with $250 gross profit before overhead and operating expenses. 

Any comments, observations, conclusions?

Carmine D.

CarmineD wrote:

I thought we were talking about 2007.  I will reserve comments about the $50 extra profit.  You really do not know how accurate your profit calculation is for Dyson, however, it is not unusual for you to try and deceive the readers.

CarmineD wrote:

Based on your calculation you may be correct.  Problem is, we do not know the accuracy of your calculation.  Most likely it is not correct as usual.

Botom line is that I told you years ago that box sales are not as important as profits.  Even $32 profit is better than the losses suffered by your beloved Hoover.  Dyson really has put the spurs to you and Hoover.

Ride em cowboy.

HARDSELL wrote:

Your first instinct is right [I highlightedit for you].  Go with it.  No maybe about it. 

Carmine D.

CarmineD wrote:

It was not an instect.  I simply said that your calculation would be correct if the data was correct.  You have said before that you have no hard facts so my instinct is that you are wrong.

HARDSELL wrote:

Here are the facts per DIB's Forbe's article: 

Net dyson profit for 2007: $64 Million

Gross annual sales: $1B

Units sold at wholesale in the USA per NPD [and confirmed by a dyson insider here]: 2 million.  Probably 3-4 Million in total worldwide.  Matt [Airblade] said he had not seen the actual numbers yet.

Do the math for yourself.  What do you get?

Carmine D.

James Dyson refinances and takes a £145m/$289m payout.  Here.

DIB:

Interesting article, which is very short on details:

The payout of $289 Million is a debt on the dyson Balance Sheet [read decrease in Assets; decrease in Capital [Retained Earnings] and increase in Liabilities.  That's not good for the dyson company IMHO.  The payout is not from dyson profits on operations.  The payout represents 450 percent more than the company's net profit for 2007 [$64 Million]. 

It raises questions:  Why is Mr. Dyson borrowing money from the company?  Did Mr. Dyson pay himself any compensation for 2007 from company earnings [Income Statement]?  Or, did he borrow from the company's assets [Balance Sheet] for his 2007 compensation?  The latter is not the normal course of business for paying yourself.  Even if you own the business.   

Dyson did it before the new UK capital gains laws go in effect [April 1].  I don't know the specifics of the laws.  My suspicion, based solely on the exigency of the dyson's Board action, is that the new laws do the following: (1)  Preclude private company owners [like Dyson] from making such huge payouts from the assets of their companies as compensation [as does the USA]; and/or (2) Tax the amounts borrowed for compensation at much higher rates [as does the US to discourage the financial practice].  Possibly both.

A side bar:  The article states that dyson appliances captured 20 percent of the US market share in 2005 and 30 percent in 2007?  If appliances is another way of saying "vacuums,' how did it arrive at the percentages?  NPD, the authoritative industry source, as told by Airblade, says dyson share is 9.5- 10 percent.    Did Mr. Dyson take the payout in the form of dyson vacuums?  That would explain it!

Carmine D.

CarmineD wrote:

Just a quick answer to your side bar..............Both numbers are correct.

9.5-10% is UNIT share

20-30% is DOLLAR share

Carmine, the UK Capitol Gains Tax is increasing by 8% in a week or so.  Many are scrambling to avoid this tax.  Here.   Perhaps Dyson paid himself 2 years out.       DIB

Airblade wrote:

Thanks Airblade.  You're right.

Carmine D.

DysonInventsBig wrote:

Thanks DIB:

You're right, and that's probably true.  Mr. Dyson paid himself now for the future...at the expense of adding debt [increasing Liabilities, decreasing Capital, and decreasing Assets] on dyson's balance sheet.  Smart and good move for him.   Good for dyson?  BAd for dyson?  Especially in the current and future economic conditions.  Good financial practice?  Or shakey? 

That payout [$289 Million] is 450 times dyson 2007 net profits [$64 Million].  It will take dyson, based on 2007 results of operations, 4.5 years to recoup Mr. Dyson's future compensation.  In business, that's a long time with alot of future uncertainty. 

The UK CGIT went from 10 percent to 18 percent.  Very low by US standards.  Does the increase warrant a future payout of 450 times 2007 net profit?  By adding substantial debt to the Balance Sheet?  Apparently, the dyson Board thought so and passed approval quickly.  To allow Mr. Dyson to avoid paying the higher income taxes to the UK.  Wonder what his UK house is assessed for property tax purposes?

Carmine D.

DysonInventsBig wrote:

If I understand the UK CGIT correctly from the readings, before the law was changed it was 10-40 percent depending on the time period that the funds were held.  It's called the "taper effect."  Whereby the longer the income producing asset is held, the less tax is owed and paid.  The new UK CGIT changes to a flat rate of 18 percent on April 5.  Lower than the 40 percent but higher than the 10 percent.

Many business owners, like Mr. Dyson, deferred compensation in the past to avoid the 40 percent tax hit and take advantage of the 10 percent rate by waiting [the taper effect].  The April 5th change eliminates the taper effect so there is no longer an advantage to holding the income producing assets.  Owners are pulling the money out of the company that would have been taxed at 10 percent.

My sense is [assuming my understanding is correct], Mr. Dyson pulled out his deferred compensation to keep taxes at 10 percent.  And quite possibly paid himself future compensation, to avoid the 18 percent hit.  Not knowing the specifics, there is no way to know what part of the $289 Million represents deferred compensation to Mr. Dyson and what part is future compensation.  Also, it is not known the amount of the debt on dyson's books for the payment of future compensation.

Carmine D.

 

Carmine, Dyson took a $60m dividend and a $60m approx. salary in this timeframe.  Here.  Assuming James is paying for his proposed school personally.  The school costs as of late, is said by Dyson, will have to be double ($25m to $50m) due to the many hurdles since the original proposal.  James’ business is not my business for sure but here this…  2 yrs salaries, dividends = $240m + $50m (school cost) nearly equals his recent payout.        DIB

DIB:

Thanks, I'll read, haven't yet.  Was curious about the dyson plan for the Engineer School.  And thought what in the world is Mr. D doing with all this money?  And then thought the good part of the $289 Million was for the School and Scholarships. 

Carmine D.

I guess you can't really criticise someone for putting measures in place to avoid paying some tax (although I'm sure some will try) when you're stumping up 50% of the cost for a school to improve the number of future engineers. Dyson often makes a point of mentioning that he's never taken a government subsidy to build his business.

If you read his book 'Against the odds', you'll see in the early days he was very nearly put out of business by a US plastics company, buoyed up with a local development subsidy, who tried to screw him for as much money as they could when production ramped up, then 'vandalised' the moulds when Dyson cancelled the contract.

One of the things I admire about Dyson is his apparent lack of bitterness or malice when MANY betrayed him.  I own an Amway/Bissell ClearTrak just so I can show my son (when he is old enough) proof of how people do steal and can screw independent inventors.

 

Moose, there is a great new book on Dyson and Podcast here.  Look for the arrow icon which plays embedded streaming audio.        DIB

CarmineD wrote:

DIB:

I began reading and realized I read already.  Then I looked at the date, March 11, 2007, for dyson's operations in 2006.

Carmine D.

Yes, I know.  This article is all of late on Dyson financials.  There is much written of the city of Bath's "little men in big chairs" who continue to string Dyson along for years.  He has had many offers from other cities who want James' school.        DIB