Wednesday, May 25, 2011

SRAM Goes Public

On April 29, 2011 a new company, SRAM International Corporation, was incorporated for the purpose of becoming a holding company with a 100 percent ownership interest in SRAM, LLC.  SRAM is the owner of RockShox, Avid, Truvativ, Zipp, and Quarq power meters.  Reuters (and many other sites) has reported that SRAM International has filed with regulators to potentially raise $300 million with an initial public offering (IPO) of common stock.  SRAM International plans trade to under the "SRAM" symbol, but it has not yet been determined which market to trade on, NASDAQ or NYSE. The number of shares that are planned to be released nor the expected value of the shares was released.  J.P. Morgan, BofA Merrill Lynch, and Morgan Stanley are the lead underwriters on the deal.

Reasons to Go Public

According to Bicycle Retailer, the purpose of the offering is to repay debt to Trilantic Partners. Trilantic (formerly known as Lehman Brothers Merchant Bank, the buyout arm of Lehman Brothers) invested $234.8 million in SRAM in September 2008 plus a 10 percent annual preferred return.

SRAM Stats

Recent documents filed with the SEC provide a few interesting facts about the world’s number two bike component maker:
  • From 2006 to 2010, SRAM grew revenues about 17% per year to more than half a billion dollars in 2010.
  • The company improved operating margins from 8% to 19% which points to increasing profit margins.
  • Net earnings (profit) in 2010 were $50 million.
  • Aftermarket sales are increasing and the company credits improved marketing
  • About two-thirds of company sales originate from the OEM segment with the remainder in the aftermarket.
  • The company estimates it holds about 15 percent market share in the $3.5 billion bicycle component market.
  • SRAM holds 550 patents.

Experts Say

According to some financial analysts, SRAM’s pending IPO could benefit from the current positive state of the capital markets.
“Timing is everything in the M&A business and the financial business,” said Laurence Levi, president of VO2 Partners, an investment firm focused on the specialty sports equipment sector. “A year ago, the market for IPOs was pretty anemic; today it’s pretty hot. A bunch of IPOs becoming active, specifically in the lifestyle market.”
Claude Proulx, an analyst with BMO Capital Markets, had this to say: “The stock market has done quite well in the last 12 months and the S&P 500 is not far from its all time high.”

In or Out?

Well that's it - time to empty out the kids' college funds and dump them into the bicycle market.  This way, I can validate my component upgrades as spending on SRAM parts will ensure my kids get the best education money can buy.

Monday, May 16, 2011

Rollin' Below Rowland - New Trail Report

There is a new trail in Edmonton and it is much different than any of the existing trails we have.  It is a 800m stretch of single track just south of the North Saskatchewan River between the Wayne Gretzky bridge and Riverside Gold Course, just down the bank from Rowland Road.  The trail is filled with plenty of short, steep, power climbs, technical side hill riding and 180 degree turns to test your slow speed bike handling skills. There has not been an official name given to it yet, so expect it to go by several names or simply a location name.

Early Ride Thoughts

Because the trail is still quite new, the soil is still quite loamy which robs you of your power.  Once the trail has been ridden and packed, I expect it to ride much differently.   The first time I rode it was on my single speed and I found it to be just a bit more work than was enjoyable.  Through the pain and suffering I could foresee how much fun this trail could be with lower gearing.  On my Sunday ride I brought out the Vertex 29er SE and the trail was much more enjoyable with a full range of gears.

Technical Aspects
The most difficult trail feature that comes to my mind as I write this is the short power climbs.  Once the trail is packed I suspect that I will be able to clean all of these, but with the soft loamy soil, these were the most challenging sections of this new trail. 

What will keep this trail difficult for the long haul is very tight turns that make riding a longer wheel based bike quite difficult.  One place especially tricky has you turning right around the corner into a skinny bridge, (when riding east to west.)  Making this corner and getting my rear wheel on the skinny will require some rear wheel hopping to get better aligned.  Riding it twice now has had my rear tire just miss the inside right even with my front tire as far left on the skinny as it will go.   Riding from west to east I was able to keep both tires on the skinny, however the uphill corner ate me up once I cleared the skinny.  Definitely a great feature to help improve my skills.

My favourite section, riding east to west, is close to the end - a small, tight switchback.  There is a small log pile into a tight 180 degree right turn followed by an even tighter left with a tricky ground formation to overcome.  Here is a video of that section:

Thumbs Up

The most impressive thing about this new trail is the lack of actual 'building' that was done.  The builder(s) did an excellent job of designing a very challenging trail by utilizing the natural contours of the area.  The ridge line is worked in on several occasions, creating a nice flow in certain areas, contrasted difficult power climbs and side hills in other areas.  It's good to see that such excellent work is being done to enhance our local trail systems.

Here is a video of the entire trail travelling west to east:

Tuesday, May 10, 2011

Get Your Granny Gear XC 2011

Over the past few seasons, a typical May long weekend for an Alberta XC racer involved heading west of Edmonton to Fern and Harvey's MTB farm for the All You Can Eat Buffet of Bacon, Pain and Suffering XC race and the Trans Stony Marathon. The Bacon XC is my most memorable course as it was my very first XC race. I managed to finish so far behind the rest of the pack that they started the next race before I even finished my last lap. I came completely unprepared - no training, no gels or energy source (okay, that's a lie - I did have some bacon in the feed zone) and I ran out of water just after my second lap. Never so much pain have I felt. It was a truly humble introduction to XC racing. The following year at Stony Plain I managed to knock 40 minutes off my previous year's time for my first podium finish. Sweet revenge. Ahh, the gamut of emotions when I think of the Bacon XC race. Sadly, Fern and Harvey sold their land; and with the sale of the land, so goes the Bacon XC and the Trans Stony Marathon. Although the Bacon XC race is gone, it will live forever in my heart. Sigh.

Enter the Get Your Granny Gear XC race at Terwillegar Park in Edmonton, AB. As the saying goes, out with the old, in with the new. And this race is definitely new. The XC race will take place this year on the Sunday but rather than a marathon on Monday, a time trial and dirt criterium have been added to the agenda on the Saturday.

Saturday, May 21st will start with a time trail run on Fireman's Loop - a long double track climb followed by a technical, single track descent. The concept is simple - each racer goes separately and the person with the fastest time wins. This is definitely a race that can be won on the climb and lost on the descent.

The dirt crit, which will follow the time trial on Saturday, will be 3/4/5 laps on, surprisingly, a dirt track.

Finally, the Granny Gear XC race on Sunday, May 22nd will be a standard ABA XC race. I will be competing in the Sport Men's category. If you are coming out to watch, I will be the one at the back of the pack - feel free to point and laugh.

Check out the technical guide HERE and register for one, or all, of the races HERE.  Anyone who isn't racing, please come out and cheer on those who are competing! 

Thank you to Hardcore Bikes and redbike for organizing this ABA event.

UPDATE - Here are my pictures from Saturday.  Please leave links to other photos in the comments!

Photos from Dave Roberts - please respect copywrite properties! 

Sunday, May 8, 2011

Are you Ready for Hydraulic Shifting?

Do you find yourself replacing shifter cables on a regular basis due to riding in muddy conditions?  Are you tired of cable stretch?  Frayed ends?  Pinch points?  These may all be a thing of the past.  A high end German component company, Acros, has produced a small batch of hydraulic shifters - right and left shifters, front and rear derailleurs, and all the hoses filled with mineral oil.  Acros displayed their completely sealed product, the A-GE system, at the Sea Otter Classic last month and it has drawn plenty of attention.  You can find plenty of articles discussing the A-GE system on many sites such as Pinkbike, Bike Radar, Bike Mag and Bike Rumor.  I am by no means any sort of subject matter expert so I will simply give you the gist of what all these sites are reporting.

Dream the Design
This is not the first attempt at a hydraulic system and this isn't even Acros' design.  These hydraulic shifters originally appeared at Eurobike in 2006 as designed by Christophe Muthers as 5-rot.  Due to limited resources, Muthers was unable to get the idea to production on his own.  Muthers approached Acros in 2009 to complete the product where Muthers was hired on the R&D team.  With some minor redesigns, the hydraulic shifting system was reborn.


The first benefit is in the shifting ability.  Without cables and wires, the A-GE system promises silky smooth shifting that should not change over time due to the sealed hydraulics.  But what about fade, as you experience with hydraulic brakes?  Because shifters don't face heat cycles as you would see with brakes, this shouldn't be a concern.  Actually, it is predicted that, barring a epic fail of the sealed system, these hydraulics may last indefinitely. 

Okay, improved shifting is fine, but running hydraulics must present a weight penalty?  Well, according to Acros, the A-GE system is 150g lighter than SRAM's XX and 175g lighter than Shimano's XTR.  This claim includes all shifters, derailleurs, cables and housing.  Impressive. 


Of course, with all these added benefits over XX and XTR, there should be a hefty price tag.  You wouldn't be incorrect - it is anticipated that for a cool $2,000 USD you can have your own A-GE system.  What?  Too steep?  Ya, no doubt.  Keep in mind this is the first run and at production level of 250, the price seems to be reasonable, all things considered.  Once the A-GE system goes into large scale production, expect the price to drop.  Once there is market saturation, the price will come down even further.  Still, even after the price hits the bottom, you have to expect that these will still cost quite a bit more than XX or XTR if you are getting better shifting at a lower weight. 

What Does the Future Hold?

This is a huge step in technology.  Similar to when hydraulic brakes entered the market, expect a few other companies to jump on board and drive each other to create improvements and push the price down.  Hopefully there will be some entry to mid level offerings that are a bit more wallet friendly.  Still, it will be a few years before these become a fixture on the Alberta racing circuit, even if there is a more 'mid level' offering for those of us who have to buy our own parts.

It will be interesting to see how far behind the 'big boys' SRAM and Shimano are on this movement.  In 2006, Shimano published a patent for hydraulic shifting mechanisms.  It would have seemed like a natural fit to introduce them to the dual control levers, but since Shimano dropped their dual control line for 2011, that seems like the least likely scenario at this point.  If the user feedback from users on the A-GE system is positive, expect the race to be on for SRAM and Shimano.

This still doesn't address my concerns with rear derailleurs and the long cage that can bend or snap off with minimal impact.  Perhaps Shimano and SRAM are focusing on internal gearing such as the Alfine rear hub or the Hammershmidt crankset?  Both require further improvements but if you were running one of these component giants, where would you want to focus your R&D?  Internal gearing or hydraulic shifting?