Bose Stock: 3 Ways to Invest In Digital Audio Perfection

Bose's Elite Brand, Ethical Culture & Its Premium Products Are Loved By Its Customers. But Bose Stock is Privately Held, So How Can You Profit?

The Bose Corporation manufactures some of the best-loved sound products in the world. Bose’s signature products include speakers, headphones, sleep aids, and vehicle sound systems.

Bose’s business has boomed with the popularity of iTunes, online music, podcasts, streaming video, audiobooks, and vehicle sound systems. The COVID-19 pandemic helps Bose because people are watching movies and listening to music at home, which increases the demand for high-quality sound systems.

One of Bose’s most popular products is its noise-canceling headsets. Noise-canceling products are popular because they allow people to listen to music, audiobooks, and podcasts everywhere. Other popular Bose items include audio sunglasses and earbuds. Bose also sells some commercial products, including aviation headsets.

One of Bose’s most interesting products is headsets for the military that allow soldiers to communicate and protect their ears on the battlefield. Those headsets have commercial applications in mines, factories, machine shops, construction sites, and other workplaces.

The popularity of home theaters and gaming drives demand for Bose products. Bose cashes in on that market with soundbars, headsets, indoor and outdoor stereo speakers, Bluetooth speakers, smart home products, and computer speakers. People use Bose speakers to listen to music, movies, and games.

Bose Stock: 3 Ways to Invest In Digital Audio Perfection
Bose Stock: 3 Ways to Invest In Digital Audio Perfection

Bose Stock

You cannot buy Bose stock; it is not available on any stock exchange because the company is privately held. Amar G Bose founded the firm in 1964, and in 2011 he donated his shares to the Massachusetts Institute of Technology, making MIT the majority shareholder in Bose.

Bose is the 109th largest privately-held corporation in the United States, Forbes estimates. Bose reported $4 billion in revenues in 2020. Dun & Bradstreet estimates Bose’s 2019 revenues at $3.60 billion.

Instead of earnings reports, Bose issues “Sustainability Reports.” The Sustainability Reports contain data about Bose’s energy use, carbon footprint, people management, safety, waste, community work, and social responsibility.  The Sustainability Reports say nothing about Bose’s financial performance.

Bose Stock Price

Bose does not have a stock price on any stock exchange because Bose is a privately held company.  This does not mean that Bose shares do not have a value; it simply means that there is no public knowledge about the price of the shares of Bose.

Bose estimates its 2020 annual sales at $3.6 billion. The other Bose financial numbers are impossible to find because the company has no obligation to disclose them to the public.

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Bose IPO

Unusually, for a successful technology company, Bose never issued an Initial Public Offering (IPO). A Bose IPO is improbable because the company makes money with its present business model. Bose has not needed to raise money from outside crowdfunding since 2017.

MIT is the majority stakeholder and receives regular dividends from the stock it owns. The only reason why an IPO for Bose would be considered would be if MIT needed a large cash injection. Considering that MIT’s shares in Bose are non-voting shares, they probably will not have a say in any future IPO.

Crunchbase estimates that Bose raised $430.165 million through equity crowdfunding in 2017. Bose can raise the money without surrendering control of the company to stockholders.

I think a Bose IPO could be successful because Bose has a strong brand that commands loyalty.

Bose Stock Symbol

There is no stock symbol or ticker for Bose shares because it has never been through the Initial Public Offering (IPO) process. During an IPO, the company’s stock price and the ticker symbol are allocated. The corporation’s shares will then begin trading on an exchange under a specific ticker.

Bose Corporation History

The Bose Corporation is an American success story and a classic tech company. Massachusetts Institute of Technology (MIT) electrical engineering professor Dr. Amar G. Bose founded the business in 1964.

Bose, a music lover, started the company because of the poor sound quality from a stereo he had bought. Four years later, Bose became a hero to music lovers worldwide when he introduced a speaker system that came close to reproducing live music.

The primary business at Bose is manufacturing and marketing sound products. Bose closed all 119 of its retail stores in North America, Europe, Japan, and Australia because of the COVID-19 pandemic, The Boston Business Business Journal reports. The Bose stores in India, South Korea, China, Southeast Asia, and the United Arab Emirates will remain open.

Most of Bose’s business is now done online and through other retailers. Bose sells through major Amazon and brick-and-mortar retailers such as Walmart, Target, and other American retailers. Bose also sells many products through its website.

Bose: 3 Ways to Invest In Audio Perfection

1. Apple Inc. (NASDAQ: AAPL)

Apple (AAPL) is Bose’s highest-profile competitor in the audio electronics sector. Apple designs and markets both speakers and headsets. Apple’s products include the popular AirPods, including AirPods Max. Apple markets home speakers, including the HomePod and the Beats Pill.

I consider Apple Bose’s most dangerous competitor because Chain Store Age lists the Apple Store as the fourth-largest e-commerce site in the US in terms of sales in 2020. Chain Store Age estimated Apple’s share of US e-commerce sales at 3.5% in 2020.

Apple is one of the world’s largest electronics brands. Statista estimates Apple’s share of the global smartphone market at 23.4% in the fourth quarter of 2020. Apple is a leading electronics brand because smartphones are the world’s most popular electronic device.

Smartphones have become the most popular means of listening to music and other audio content. Apple is one of the biggest suppliers of digital audio content. Statista estimates that Apple Music had 72 million subscribers in June 2020. Apple Music’s subscriber base grew from 60 million in June 2019 and 50 million in May 2018.

Many people trust Apple as a source of content and hardware. That makes it difficult for Bose to compete with Apple.

Apple is one of the most lucrative companies in the world. Apple reported a $33.354 billion quarterly operating income and a $44.328 billion quarterly gross profit on December 31, 2020.

In 2020, Apple’s quarterly income grew from $25.569 billion on December 31, 2019. The quarterly gross profit grew from $35.217 billion on December 31, 2019.

Apple is a growing company; according to Stock Rover Research Reports, Apple’s revenue growth rate was 21.37% in the quarter ending on December 31, 2020.

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Apple’s quarterly revenues grew from $91.819 billion on December 31, 2019, to $111.439 billion on December 31, 2020.

One reason why investors love Apple is that it generates enormous amounts of cash. Apple reported a quarterly operating cash flow of $38.763 billion on December 31, 2020. The quarterly operating cash flow grew from $30.516 billion on December 31, 2019.

Apple reported a quarterly ending cash flow of $37.719 billion on December 31, 2020. The quarterly ending cash flow fell from $41.665 billion on December 31, 2019.

Apple pays off enormous amounts of debt. It reported a quarterly financing cash flow of -$32.249 billion and six quarters of negative quarterly financing cash flows on December 31, 2020.

Apple had $99.281 billion in long-term debt on December 31, 2020. Apple’s long-term debt shrank from $102.161 billion on December 31, 2019.

Apple offers enormous amounts of value. Apple had $76.826 billion in cash and short-term investments on December 31, 2020. Apple had $354.054 billion in total assets on December 31, 2020.

Apple’s value grew in 2020 because it had $340.618 billion in total assets on December 31, 2019. The cash and short-term investments fell from $107.162 billion on December 31, 2019.

I consider Apple a terrific value investment because Mr. Market paid $129.87 for its stock on February 19, 2021. Apple’s share price rose from $80.08 on February 20, 2020. I think Mr. Market undervalued Apple at $129.87 on February 19, 2021.

Apple is one of Warren Buffett’s stocks. CNBC estimates that Berkshire Hathaway (NYSE: BRK.B) owned 907,599,762 shares of Apple on December 31, 2020. Apple is Berkshire Hathaway’s fourth-largest stock holding in CNBC’s estimate.

The dividend is one reason why investors buy Apple. Apple paid a 20.5₵ quarterly dividend on February 5, 2021. In 2020, Apple’s quarterly dividend grew from 19.25₵ on February 7, 2020. Dividend.com estimates that Apple offered a 12-month dividend of 82₵ and a dividend yield of 0.63% on 19 February 2021.

I consider Apple the best consumer electronics stock because of the low share price, the dividend, and the enormous amounts of cash the company generates. I like Apple because its revenues, gross profit, cash, and income grew during the COVID-19 pandemic.

The ability to grow during global catastrophes gives Apple a margin of safety. I think the high margin of safety makes Apple a modern-day “widows and orphans” stock.

In old investment industry slang, a widows and orphans stock is an equity that is so safe people with no jobs; such as widows and orphans could rely upon it for income.  Those seeking a safe income stock that offers growth need to investigate Apple.

2. Sonos Inc. (NASDAQ: SONO)

The nearest direct competitor to Bose is Sonos (SONO), an American home audio product manufacturer.

Sonos’ signature product is wireless speakers for televisions, stereos, computers, video games, home theaters, and other gadgets. Sonos also markets some wired speakers and voice control devices.

The latest product at Sonos is the Radio HD audio streaming service. Sonos claims Radio HD offers high-definition lossless audio quality for endless streaming of songs. Listeners subscribe to Sonos HD for $7.99 a month.

Sonos HD’s idea is to compete with audio streaming services such as Apple Music, Spotify (NYSE: SPOT), and Sirius XM (SIRI). Sirius XM owns Spotify’s American competitor Pandora.

One reason Sonos management wants a streaming service is to generate steady income in the form of subscriptions. Warren Buffett calls such income float and used it to build Berkshire Hathaway. Float is any regular stream of cash such as subscriptions or insurance premiums a company can tap for growth or debt repayment.

Streaming audio subscriptions may not be a  reliable source of income. Spotify reported an -$85.30 million operating loss on December 31, 2020.

Sonos can make money, unlike Spotify. It reported a quarterly operating income of $137.38 million and a quarterly gross profit of $299.43 million on December 31, 2020.

The quarterly operating income grew from $67.46 million on December 31, 2019. The quarterly gross profit grew from $227.62 million on December 31, 2019.

Sonos is a growing company. Its’ quarterly revenues grew from $562.08 million on December 31, 2019, to $645.48 million on December 31, 2020. Stockrow estimates Sonos had a revenue growth rate of 15.53% in the quarter ending on September 30, 2020. The revenue growth rate fell to 14.86% on December 31, 2020.

The value at Sonos is small. Sonos had just $1.066 billion in total assets on December 31, 2020. The total assets grew from $873.93 million on December 31, 2019.

Sonos can generate some cash. It had $678.03 million in cash and short-term investments on December 31, 2020. The cash and short-term investments grew from $408.60 million on December 31, 2019.

Sonos had a quarterly operating cash flow of $214.51 million on December 31, 2020. The quarterly operating cash grew from $118.84 million on December 31, 2019.

Sonos had a quarterly ending cash flow of $678.03 million on December 31, 2020. The quarterly ending cash flow rose from $408.60 million on December 31, 2019.

Sonos is borrowing some money to stay afloat. The company reported a quarterly financing cash flow of $64.39 million on December 31, 2020. The quarterly financing cash flow rose from $1.22 million on December 31, 2019. However, Sonos reported no long-term debt on December 31, 2020.

3. Emerson Electric Co. (NYSE: EMR)

Emerson (EMR) is an American manufacturing company that makes some audio products, including Bluetooth Headphones for workers.

The headphones protect workers’ ears from the noise made by machines. The Bluetooth allows the workers to communicate, or listen to audio, while they work.

Some Emerson brand audio products, including Bluetooth wireless products, are available from American retailers, including Walmart. Emerson’s focus, however, is on industrial solutions, including automation, air conditioning, heating systems, and climate controls. Emerson also manufactures air conditioning and heating units for residences.

Emerson is an indirect competitor to Bose that makes some similar products. Emerson does not manufacture speakers which are one of Bose’s signature products.

Emerson makes money. It reported a quarterly operating income of $725 million and a quarterly gross profit of $1.723 billion on December 31, 2020. Emerson is a stable company. Its quarterly revenues rose from $4.151 billion on December 31, 2019, to $4.161 billion on December 31, 2020.

Emerson’s revenue growth shrank in 2020. Stockrow estimates that Emerson’s revenue growth fell by -8.93% in the quarter ending on March 31, 2020, the revenue growth rate fell to -16.44% on June 30, 2020, and rose to 8.31% on September 30, 2020. Emerson finished 2020 with a quarterly revenue growth rate of 0.24%.

Emerson’s business generates cash. Emerson reported a quarterly operating cash flow of $808 million on December 31, 2020. In 2020, a quarterly operating cash flow rose from $424 million on December 31, 2019.

Emerson began 2020 with an ending cash flow of $2.197 billion on December 31, 2020. The ending cash flow rose from $1.635 billion on December 31, 2019.

Emerson had $2.197 billion in cash and short-term investments on December 31, 2020. Thus, the company finished 2020 with cash despite the falling revenue growth rate.

Emerson had value in the form of $23.678 billion in Total Assets on December 31, 2020. The Total assets grew from $21.101 billion on December 31, 2019.

Emerson did take on some debt in 2020. Its long-term debt grew from $4.018 billion on December 31, 2019, to $5.892 billion on December 20, 2020.

Emerson will pay a 50.05₵ quarterly dividend on March 10, 2021. The quarterly dividend grew from 50₵ on September 10, 2020.

Overall, Emerson paid a $2.01 12-month dividend and a 2.38% dividend yield on February 19, 2021, Dividend.com estimates. I think Emerson is a good dividend stock because of these numbers.

I consider Emerson a cheap dividend and income stock that offers some value. I do not consider Emerson a value investment because its ability to generate cash seems limited.

Conversely, Emerson is a stable company with a reasonable margin of safety. Emerson could be a good stock for people who need dividend income but want stability and a low price.

Emerson shows that smaller electronics manufacturers such as Bose can be stable, generate cash, make money, and pay dividends. Emerson does not show if Bose could be a stable or dividend-paying company, however.

The difference between Emerson and Bose is that Bose is primarily a consumer products company while Emerson is an industrial and commercial products company. Most of Bose’s customers are music and audio fans who want good sound and noise-canceling devices.

Most of Emerson’s customers, on the other hand, are companies seeking large-scale solutions. The Bluetooth headsets at Emerson appear to be an accessory to the company’s industrial automation.

The headset could allow workers to communicate with each other and their managers. In the future, Bluetooth headsets could allow workers to communicate with artificial intelligence (AI) running machines.

The workers could give voice orders to machines and talk to machines in the way that homeowners talk to Amazon’s Alexa devices. A worker could use an Emerson Bluetooth headset to tell machines to turn on and off, for example.

Today, however, there appear to few commercial or industrial uses for Bose or Emerson Bluetooth headsets.

Summary: Bose Stock

Bose is an extremely innovative company with strong assets. Bose’s elite brand, product patents, profitability, and an ethically strong corporate culture, would guarantee a successful IPO. Unfortunately, there is no sign that the public will ever get the chance to invest as there are no plans for a Bose IPO.

Sonos, Apple, and Emerson Electric are the best viable alternative investments to Bose.

Daniel G. Jennings is a highly-experienced freelance writer and blogger who lives and works in Colorado, USA. Jennings has written extensively about value investing, the stock market, retail, cryptocurrency, politics, marketing, technology, and many other subjects. His writing has appeared at Seeking Alpha, The Motley Fool, Geek Crunch Reviews, Empresa Journal, and many other websites. Jennings makes daily posts of his latest writing to www.MarketMadHouse.com

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