Tuesday, May 20, 2008

Waterford Wedgwood: the ultimate in unused wedding gifts?

The Government has, rightly, decided not to guarantee a €39m loan for Waterford Wedgwood.

Sir Anthony O’Reilly and his brother-in-law, Peter Goulandris, are reported to have invested up to €300m in the company in recent years, and are committed to investing a further €100m+ under current plans. The share price is currently just over 1c, which means the stock market values the entire company @ just €54m, so the two boys are nursing a very substantial loss.

It’s hard to see the light at the end of this particular tunnel, though Waterford Glass itself is probably viable. The millstone is the china division which includes several “iconic” brands e.g. Wedgwood, Rosenthal etc..

The investment rationale for this particular enterprise stems from Sir Anthony’s conviction of the value of quality brands with worldwide recognition. However, it seems that some “quality” brands have more historic than future value.

While the glass division has, in the past decade, taken many steps to produce more contemporary designs which might be used regularly by buyers (how many of you have [or your parents have] pieces of Waterford at home which still display those little green stickers?), you rarely find yourself seated in front of a place setting of fine bone china.
Perhaps the new slogan should be “Waterford Wedgwood, the ultimate in unused wedding gifts.”?

Peter Goulandris can at least console himself with this thought: Thank God Pan Am had already gone to the wall before his brother-in-law took off on this “brands” flight of fancy. Now that really would have been a black hole!

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