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Harmon Kardon Climbing Back on Top as Car Sales Revive

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On: Tue, Jun 1, 2010 at 8:56AM | By: Michael Jon Lazar


Harmon Kardon Climbing Back on Top as Car Sales Revive

When you first step foot—or sit—inside one of the many very fine luxury cars that are out there these days, many people don’t think of the audio system that is in that car. In fact, I would be willing to bet that most people who drive these cars don’t even know that Harmon Kardon makes audio systems for some pretty fancy rides. Cars like BMWs, Audis, and Mercedes-Benz; to name a few. According to a recent report published on Barrons, “Sales of audio and other equipment to auto makers such as BMW, Mercedes-Benz, and Audi account for 70% of the company's sales.”

If you could—because I know that I certainly would—would you choose to drive a luxury car? If, say, money were no object, would you desire that feature-loaded ride with a voice-activated audio system that interfaces with an MP3 transmitter to your iPod and even docks it while you drive? Or one with a touch screen Harmon Kardon GPS navigation system that will always get you where you are going safe and sound? For certain these things can be easily added to any car; you can just buy them and install them. But if you ask me, features like the Harmon Audio and GPS systems are staples that really make such luxury cars like BMWs, Audis, Mercedes-Benz, and others in the pack really stand out.

And Harmon—while showing dismal numbers recently, and falling stocks—is not going anywhere soon. Indeed, rather, it's quite the opposite. The company is on a strong track for success. And here is why.

The CEO and the Chairman for Harmon, Dinesh Paliwal, really puts their company’s outlook into strong perspective in an interview with Barrons, “We anticipate continued customer wins due to a strong innovation pipeline and emerging-markets expansion.”

And the outlook for the company is pretty darned good for the years ahead. As the auto market slowly but surely recovers, more people are buying cars. And, to boot, more people are buying luxury autos—ones that have these fancy and elite audio and GPS systems.

To give you a better idea of how the auto market looks, taking a gander at the projections of sales for Harmon really does make it ever so apparent: The market is coming back, my friends!

In the same Barrons interview, Paliwal is determined to demonstrate how saucy the future of Harmon looks. “Anxious investors also are ignoring Harman's healthy balance sheet, with long-term debt of $400 million equal to just 26% of total capital. In addition, the company has a $10 billion-plus order backlog for autos. Our revenue stream is secured for the next five years.”

And to really give you a taste of the scope of this company and how it has grown exponentially over the past several decades, the article in Barrons really does tell the whole story, “Founded in 1953 as Harman Kardon, Harman controls 38% of the $1.5 billion global audio market. Privately held Bose is No. 2, with a 28% share. Harman also is the market leader in auto infotainment, a $9 billion market growing by 11%-12% a year.”

For all of you lovers of luxury cars out there, rest assured: More than likely that fancy stereo system in your car is a Harmon. And more than likely it will remain as such. As this amazing audio speaker and GPS company doesn’t look to be going anywhere, anytime soon.

And that’s a good thing!




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