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Old 01-12-2010, 10:29 AM   #1
JohnG
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Arrow Segway Merges with JWH Holdings (Segway UK)

Well, I received my stockholder letter yesterday. You know it's not good when it starts off with "Dear Former Stockholder of Segway Inc." It's dated 12 days ago, but was FedEx'd to me just yesterday.

JWH Holdings, Inc. turns out to be a holding company formed for just this transaction (incorporated in Delaware). But if you look up the contact address for notices in the agreement, you'll find that it appears to be the same address as Segway UK. So the upshot is that Segway UK purchased Segway Inc.

My favorite line in the entire document appears on page 13:

Quote:
(ix) each issued and outstanding share of Common Stock (what I have) shall be cancelled and no longer be outstanding and shall cease to exist and no consideration shall be delivered in exchange therefor.
Pretty much says it all. The agreement is structured in such a way as to make putting a price tag on it a little difficult. But it's not really a "merger" any more than Chrysler and MB was a merger (e.g., in name only).

Jim Norrod appears out as CEO. Tricia Laidler is the new CEO and Wayne Mitchell is the new COO.

I hope this means a bright future for the remaining company.

John

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Old 01-12-2010, 11:25 AM   #2
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Quote:
Originally Posted by JohnG View Post
Well, I received my stockholder letter yesterday. You know it's not good when it starts off with "Dear Former Stockholder of Segway Inc." It's dated 12 days ago, but was FedEx'd to me just yesterday.

JWH Holdings, Inc. turns out to be a holding company formed for just this transaction (incorporated in Delaware). But if you look up the contact address for notices in the agreement, you'll find that it appears to be the same address as Segway UK. So the upshot is that Segway UK purchased Segway Inc.

My favorite line in the entire document appears on page 13:

Pretty much says it all. The agreement is structured in such a way as to make putting a price tag on it a little difficult. But it's not really a "merger" any more than Chrysler and MB was a merger (e.g., in name only).

Jim Norrod appears out as CEO. Tricia Laidler is the new CEO and Wayne Mitchell is the new COO.

I hope this means a bright future for the remaining company.

John

I assume JWH is Jimmy Heselden, the founder and owner of Hesco Bastion. Jimmy has been a backer of Wayne Mitchell of Segway UK for a couple of years.
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Old 01-12-2010, 12:30 PM   #3
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Quote:
Originally Posted by JohnG View Post
Well, I received my stockholder letter yesterday. You know it's not good when it starts off with "Dear Former Stockholder of Segway Inc." It's dated 12 days ago, but was FedEx'd to me just yesterday.

JWH Holdings, Inc. turns out to be a holding company formed for just this transaction (incorporated in Delaware). But if you look up the contact address for notices in the agreement, you'll find that it appears to be the same address as Segway UK. So the upshot is that Segway UK purchased Segway Inc.

My favorite line in the entire document appears on page 13:

Pretty much says it all. The agreement is structured in such a way as to make putting a price tag on it a little difficult. But it's not really a "merger" any more than Chrysler and MB was a merger (e.g., in name only).

Jim Norrod appears out as CEO. Tricia Laidler is the new CEO and Wayne Mitchell is the new COO.

I hope this means a bright future for the remaining company.

John

So often, the common stockholders get nothing. I wonder what the preferred stockholders got. The later investors, at least, probably lost money but got something.

However you look at it, from the stockholder's standpoint, this is not a success. However, it may mean a stronger company. This will make any future stock sale much easier, and it could even lead to the company going public down the road. (I don't expect it to, actually, but it would be more feasible now).

Whether this is good for us, depends on what the new management and the new owners do with the new money.

MY agenda would be to reduce costs, come out with a lower-priced (but still high quality) model, and improve marketing visibility.

I don't see a lot of room for production cost reduction, though. I wonder how much labor costs are -- my guess is not that much. I think a lower-cost model would pretty much have to sacrifice battery size.

So I'll go out on a limb and make that my prediction. Minor cost reductions that add to the bottom line (not lowering the price), and a lower-end model that's basically just a smaller battery.

I wonder if the timing of this is tied to finally getting some (vague) motion on the issue with the UK transportation folks? And whether it will have any influence on that?
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Obviously, we can't have infinite voltage, or the universe would tear itself to shreds, and we wouldn't be discussing Segways.
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Old 01-12-2010, 06:53 PM   #4
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Question Official Announcement???

I just check INC.'s website, and as of 5:49 PM EST 1/12/2010 it still lists Jim Norrod as CEO, with no indication of a change of ownership nor of the executive changes. It will be interesting to see the press release, assuming there is one in the works.
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Old 01-12-2010, 09:34 PM   #5
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I don't know when they'll announce, but I assume it will be shortly. Not sure why they would send out the shareholders letter significantly before such an announcement.
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Old 01-12-2010, 10:33 PM   #6
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Do you think we will see Segway production go to China now? Which would lower cost substantially.
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Old 01-12-2010, 10:58 PM   #7
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It's my understanding that this has been considered in the past (and in fact, there may be components now manufactured in China). But the entire production? I doubt it. Not enough volume to make it interesting to most Chinese manufacturers.
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Old 01-12-2010, 11:38 PM   #8
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Default Moving manufacturing and batteries to China to reduce costs

Cost should come down. Here is my analysis

Well if my calculations are correct
Segway costs about $5000
Batteries cost $1500 and made by Valence Technologies

Valence might be gaining some traction they have got 5 million dollars in battery orders from Smith Electric Vehicles in the last month. With the way the government is supporting the electric vehicle the cost of batteries should come down this year. Brammo who is manufacturing thier bikes in the USA was selling their electric motor cycles for 12,000 with Valence batteries and dropped the price last November to 8,000. Citing the reason for the cost reduction was due to the components costing less. The most expensive component by far is the battery. They manufacture here because they want to be made in the USA and there really isn't that much cost savings for them.

Battery cost might have already dropped for Segway but they might not be passing it on the consumer because they don't think a $500 to $700 reduction in price would change demand. I would think there are some places with out losing quality that they could reduce costs on the $3500 of the rest of the cost but I am not an expert in Segway Manfacturing.

Hopefully new management will make some positive changes! Find ways to lower the cost. I think segway has been making progress in Tourism, Policing, and Military. They just need to make the jump to mainstream.
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Old 01-13-2010, 12:57 AM   #9
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You are confusing the selling price with cost.

I would like to think batteries from Valence Technologies are "gaining traction", but I read a lot about battery technology for electric/hybrid vehicles, and Valence is rarely mentioned. Valence cells are already made in China, I believe, not the USA. Curiously, there doesn't seem to be a reference to Segway on the Valence website. If it IS there, it's buried pretty good!

To put it in perspective, $5 million would pay for batteries for about 4,000 Segs, by my estimate. If this were a monthly order, it might be notable. If it is an annual order, it does not significantly change the manufacturing economy of scale for manufacture of Lithium Ion batteries.
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Old 01-13-2010, 07:41 AM   #10
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The Segway batteries are "purpose-built" soley for the Segway. At least I haven't seen any other applications using the Segway battery technology.

Others generally develop electric mobility products around existing battery platforms. That just wasn't really an acceptable option for Segway for a variety of reasons.

Unless they figure out a way to increase the number manufacturered, either by greater production or licensing to others (or both), I wouldn't expect much in the way of price reduction of the batteries.
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