Contributions from the magazine TIME
From the Mar. 2, 1925 : Gillette Razors From the Sep. 12, 1927 : Bogus Blades From the Feb. 27, 1928 : One Dollar From the Jun. 4, 1928 : Safety razor From the Apr. 21, 1930 : Patent War From the Sep. 1, 1930 : Deals & Developlents From the Oct. 27, 1930 : Price of Peace From the Dec. 1, 1930 : Gillette Ratified From the Aug. 24, 1931 : Segal v.Gillette From the Feb. 18, 1935 : Earnings From the Aug. 26, 1935 : Razor Triumph From the Nov. 16, 1936 : Dry-Shave War From the May 24, 1948 : Not So Sharp From the Jul 25, 1949 : The Razor's Edge From the Oct. 20, 1961 : King of Shaves From the Jan. 29, 1965 : The Blade Battle From the Apr. 28, 2003 : A Cutthroat Business
From the Apr. 21,
1930 issue of TIME magazine :
With fanfare of a $10,000,000 advertising campaign, Gillette Safety Razor Co. (oldest, largest) last month announced a new razor, a new blade, promptly proceeded to distribute them. Last week gloating Gillette advertisements said: "We had planned to produce 80,000 of the new razors daily. We have found it necessary to increase this to 100,000 a day." Earnings for their first 1930 quarter were $2,164,348, compared to $4,531,218 in 1929. The decrease was attributed to the cost of preparing the new blade and razor. Jubilant none the less sounded Gillette though, as nearly everybody knew, there was a butterfly in its ointment. This was the Probak "butterfly" blade (so called because of a filigree design in its center), invented by Henry J. Gaisman (also inventor of the autograph system used in Eastman Kodaks), chairman of AutoStrop Safety Razor Co., manufacturers of Probak. This blade, which fits the Gillette razors, was patented in 1928; a patent was reissued for it in January 1930. New Gillette blades bear the legend "Patents Pending," are, therefore, not patented.
Fortnight ago what every razorman had been expecting occurred. AutoStrop filed suit against Gillette for patent infringement, asked I) that Gillette discontinue manufacture of its new blade & razor; 2) that Gillette turn over to AutoStrop all profits earned from the new blade & razor; 3) that Gillette pay damages to AutoStrop for loss of AutoStrop sales caused by Gillette's blade & razor. Gillette had been awaiting the suit. In March a statement to shareholders said, in part: "We are not only prepared for any legal controversy but we invite it." As in the case of the Youngstown-Bethlehem steel merger the law became the final and most important arbiter in a business battle.
Rumors that AutoStrop had surreptitiously obtained plans of the new Gillette razor, had quickly designed a blade to fit it, are roundly denied. AutoStrop claims that its blade will fit any double-edge razor. In November 1929 when first AutoStrop's Probak blades were marketed they fitted the following razors: Elite, Loew, Renard, Darwin, Holtz, H & T, Kace, Via and, of course, Gillette. Probak manufactures its own holder but has not advertised it.
From the Oct. 27,
1930 issue of TIME magazine :
Price of Peace
"In 1895, when I, King Camp Gillette, was 40, I first thought of the safety razor." So, a decade ago, wrote the father of a great company, a great industry. The proud ring in his words was justified. His invention was no haphazard one. For years he had pondered the possibilities of finding some cheap article that would be used daily, and have a constant replacement demand. The growth of Gillette Safety Razor Co. had been fast and sure, accomplished out of earnings. Into all countries had gone packages of blades, carrying the dollar-proud face of King Camp Gillette. Last week he still had reason to be proud. Gillette Safety Razor Co. is the undisputed world-leader in the industry. But also justifiably proud was another inventor, likewise a razor-maker: Henry Jaques Gaisman, founder and head of AutoStrop Safety Razor Co. Inc. Last week Mr. Gaisman brought to what seemed a triumphant conclusion the corporate battle between his company and mighty Gillette.
Since early boyhood Inventor Gaisman, a bachelor, 60, has been having brilliant ideas. More than 1,000 of them have been patented. Swivel chairs, men's belts, carburetors have benefited from his inventions. And inventors are still spurred on by the memory of the $300,000 George Eastman paid Inventor Gaisman in 1914-for his writing-on-film patent. But his most profitable inventions have been in the razor field. He has created processes for making blades, has designed blades and razors. In 1906 he founded AutoStrop Safety Razor Co. which soon became important in the industry. Its chief product was the Valet AutoStrop Razor. For years the relations between AutoStrop and Gillette were as between any two competitors. But last winter, as shavers great and small remember, Gillette prepared to market a new razor & blade. And by a strange coincidence, Probak Corp., an AutoStrop subsidiary, was ready with a blade that fitted the new Gillette razor. Thus began the greatest razor-war of all time.
Chronicle of the Battle. The Gillette-AutoStrop battle dates back really to the year 1921, when came an important milestone in the Gillette history: the expiration of most of the Gillette patents. But a few extracts from the course of events in 1930 serves to tell the story of the battle. And the gradual reversal of position of the stocks of the two companies shows how Wall Street, always eager to forecast, reached a correct verdict.
January 9 Every wheel in the Gillette plant at South Boston stopped at noon. Razor No. 115,272,539 had just been completed. A half hour later the wheels started moving again. Razor No. 1 of the new type was made. Great secrecy marked the brief ceremony. That day Gillette closed at 102½, AutoStrop at 38⅜.
January 14. Mr. Gaisman received further patents on his new blade, assigned them to Probak Corp.
February 7. Chairman John E. Aldred of Gillette: ". . . Rumors have been circulated, mainly in stockmarket circles, in regard to the Gillette Co. . . . Based upon the advice of our attorneys we are pleased to assure you that the patent situation ... is being developed in a usual and orderly manner and that we anticipate no delay or difficulty." By then, Gillette was $97½, AutoStrop $45.
February 28. Boston News Bureau: "Public response to the new Gillette razor and blade has exceeded expectations by the management."
March 8. Gillette began a $10,000,000 advertising campaign.
March 18. Gillette announced: "We are not only prepared for any legal controversy, but we invite it."
April 2. Probak accepted the invitation, filed suit asking an injunction restraining Gillette from making further blades of the new type, also asked damages on blades already sold. Gillette stock was then down to $912, AutoStrop up to $51.
May 29. Gillette answered by saying Probak's patents were invalid and void. Stock prices: Gillette $87½; AutoStrop $53⅞
July 25. Rumors that there would be a merger on a share-for-share basis. Auto-Strop, earnings up 95% over corresponding period last year. Gillette, $68½ Auto-Strop, $53.
September 25. Case would come up in December, it was announced. Merger negotiations reported not dropped. Gillette $58¼; AutoStrop $75.
October 16. Plans for the merger announced. Gillette drops to $43!, the next day makes a new low at $38½ AutoStrop strong at $72.
Merger. Though last week's merger plan had yet to be formalized by stockholders' vote, statisticians began to compute the financial ramifications of the deal. Two facts stood out: the cessation of patent litigation is a costly peace for Gillette; Gillette has paid far more to get AutoStrop than AutoStrop is receiving.
In anticipation of the deal, perhaps expecting a share-for-share exchange, Gillette in July and August bought in a large block of its stock at average cost of about $79 a share. This expectancy, if it existed, was shattered by subsequent events. What AutoStrop actually wanted was share-for-share, to be sure, but it wanted dividends guaranteed, so that AutoStrop stockholders could get AutoStrop earnings whatever might happen to Gillette. AutoStrop agreed to take 310,000 shares of a $5 cumulative preferred stock for its growing business, which may earn $2,000,000 this year. Gillette, left with its block of stock and a big paper loss, decided to "reclassify" the block into preferred. A $20,000,000 bond issue was decided upon, to pay off loans made to buy this stock. This issue costs $1,000,000 a year in interest, would be retired should Gillette common sell over $100 again. The new, preferred stock will cost Gillette another $1,550,000 a year in dividends, is convertible into common share for share. These prior charges are partially offset by the reduction of Gillette common outstanding, but the altitude of the price Gillette is paying for patent peace is obviously impressive.
Viewed in the perspective of a long future, however, Gillette is well off indeed.
In obtaining AutoStrop it gets, besides good products and profits, several strategic plants, valuable sales machinery, smart management. More than that, Gillette avoids the costs of a long law suit, is totally insured against the calamity that a verdict against the company would have been. To date 14,500,000 of the new Gillette razors, 200,000,000 of the new blades have been manufactured. Should royal ties have been awarded to Probak, they probably would have mounted to staggering sums this year, next year, every year that Gillette continued its present razor.
With the razor a huge success from the start, protection was vital.
Probably never answered will be the question that the situation suggests: Did shrewd Inventor Gaisman plan from the first to use the Probak blade to force Gillette to buy AutoStrop? If so, he succeeded brilliantly, with only one considera ion not obtained: The greatest name in safety razordom is still King Camp Gillette, not Henry Jaques Gaisman.
From the Nov. 16,
1936 issue of TIME magazine :
Few men have been so long or so profitably interested in shaving as Colonel Jacob Schick. It was he who first applied the principle of the repeating rifle to the design of safety razors, inventing in 1921 the Schick magazine razor with a plunger for discarding and inserting blades. Eight years later he perfected the power-driven shave. The Schick Dry Shaver, an electric gadget selling for $15 which mows down whiskers without cream or lather, has found its way into 500,000 U. S. homes. Fortnight ago Colonel Schick came unbloodied through the first round of the year's biggest razor battle when the U. S. District Court in Brooklyn held that his basic patent for the Dry Shaver had been infringed by Dictograph Products Co.
Trouble between Colonel Schick and Dictograph's Chairman Archie Moulton Andrews began in 1934 after the Chicago World's Fair. Promoter Andrews, who had had permission to sell the Dry Shaver at the Fair along with his own Lektrolite cigaret lighter, claimed Midwestern distribution rights. Colonel Schick denied the claim. Irate Promoter Andrews proceeded to work out and manufacture in Stamford, Conn., not far from the Schick plant, a rival electric razor called the Packard Lektro-Shaver. Colonel Schick sued Dictograph for infringement of patent. Mr. Andrews, who owns 20 shares of Schick stock, replied by bringing suit for mismanagement against the Colonel, who owns all the rest of Schick's 5,620 shares.
Basic patent in question concerned the shaving mechanism in the head of the razor. The Schick Dry Shaver tapers to a thin edge of metal perforated by tiny slots. Whiskers caught in these slots are cut off by a blade shuttling back and forth beneath them. The Lektro-Shaver differs by being roundheaded, with a single horizontal slot in which whiskers are sheared off by a blade in rocking motion. Dictograph held that these differences were essential and that the Schick patent had been anticipated, anyway, by an English inventor named Appleyard in 1913. The court, however, found the evidence of infringement "inescapable."
Promptly Dictograph announced that it would appeal the decision, reminded dealers that patent insurance protected them against possible loss, found cause for satisfaction in the court's finding that a second patent dealing with hair disposal mechanism had not been infringed.
At this Colonel Schick, who had been called back from golfing in Bermuda for the decision, sputtered with rage. Into the advertising columns of Manhattan newspapers last week went three-column Schick ads, quoting the decision to prove that Lektro-Shaver had been upheld only on a minor point. Best quotation in the Colonel's opinion was this: "The Schick device. . . is new, novel, and useful, and it can be well understood that in all probability this device will revolutionize the manner and method of shaving."
Now nearing 60, squarejawed, shaggy-haired Colonel Schick is convinced that both he and his razor will outlive all competitors. For himself, he has a theory of longevity which involves losing the ordinary mortal awareness of time. For the Schick razor he envisions a great world market. He incorporated his patent-holding company, Schick Industries. Ltd., in Nassau, Bahamas, where he has neither income tax nor corporation tax to pay. Recently he has won two notable patent decisions in Germany and Czechoslovakia, has built a second Schick plant in Stamford and another in Montreal.
From the Jan. 29,
1965 issue of TIME magazine
While the safety razor and the electric shaver have thoroughly conquered the U.S., many Europeans still strop their own razors or visit a barber for a shave. This naturally makes Europe highly attractive to the world's razor-blade makers. Throat-cutting competition for the market is raging between Boston-based Gillette Co., world's biggest producer, and Britain's Wilkinson Sword Ltd., whose introduction of the long-lasting stainless-steel blade changed the whole nature of the market (TIME, May 1). Stainless blades now account for almost 70% of British blade sales, 35% of the German market, and are increasing fast in other countries as delighted shavers try them. So far, smaller Wilkinson has been holding its own against Gillette.
Badly Nicked. Last week Gillette started distribution in Britain of a new stainless blade that will sell for less than both present Gillette and Wilkinson blades.* Gillette's new Seven O'Clock, which sold under that name in traditional carbon steel, will be 14¢ less for a five-pack than Gillette's premium Silver stainless or Wilkinson Super Sword-Edge. By bringing out an established name in stainless, Gillette hopes to hold the old Seven O'Clock market while luring away Wilkinson shavers who never tried Gillette's Silver blades. In Germany, Gillette has also switched a well-known Gillette blade name Rotbart (red beard) to stainless, hoping to beard Wilkinson in the same fashion.
Gillette needs a breakthrough. Unlike Wilkinson, which makes only stainless blades, Gillette frequently has to fill one pocket from another as customers switch from its carbon blades to its stainless. This shift, along with high promotion costs for the new blades, has badly nicked Gillette profits. From record 1962 earnings ($45.3 million) the company slipped 8% in 1963 despite higher sales, lost another 11.5% last year. Gillette's British subsidiary cut its employee force 5% last summer, discontinued longtime fair-trade prices on blades and hiked retailer discounts to stimulate sales.
Wary Watching. The new marketing moves, Gillette feels, will once more give earnings that old smooth feeling. Even so, it warily watches Wilkinson, which now sells in 50 countries (v. Gillette's more than 100) and quietly slipped into France recently with low-key ads that announced: "Elle est arrivée—the Wilkinson Super Sword." In both France and Italy, Gillette produces lower-priced brands similar to Seven O'Clock that will be converted to stainless if the war heats up. Meanwhile, it receives royalties regularly from Wilkinson, whose blades and bustling business are based on a 1959 Gillette patent ignored until Wilkinson came along.
*Gillette is also testing a cartridge razor in which the shaving surface is a continuous reel in place of individual blades; the shaver turns a knob to advance the reel when an edge becomes dull.
From the Oct. 20,
1961 issue of TIME magazine :
King of Shaves
The gloom that hung over Cincinnati last week as the World Series ended in five games hung just as thickly over a Boston executive suite. The annual radio and television World Series sponsorship costs the Gillette Co., the world's largest razor-blade manufacturer, a flat $3,000,000, whether the series goes four or seven games. "You root for anyone you want for the first game,'' is a Gillette axiom. "After that, you root for the underdog so that Gillette can get its full seven games worth of advertising."
Universal Mustache. But if it did not feel sharp, Gillette was looking sharper than ever. Half of all the shaving done in the U.S., including the women's and electric shaving markets, is done with Gillette razors and blades. Since its founding in 1901, Gillette has never failed to make a profit, last year earned $37 million on record sales of $225 million. Gillette Board Chairman Carl J. Gilbert anticipates that the post-World Series push will boost 1961 sales to a new record.
Gillette was founded by a man who needed a shave. Standing in front of his mirror one day in 1895 with only a dull straight edge. King Camp Gillette, a salesman of bottle tops, suddenly had a vision of a flat, two-edged safety razor centered in a perpendicular holder. Gillette scraped up some money from friends, formed his company in 1901. He placed his own bushily mustached face on every package of blades, and launched a widespread advertising campaign to debeard the U.S. male. So successful was Gillette that his face became a medicine-cabinet fixture and the close shave a daily ritual. With firm patents on its razor and blade, Gillette was unnicked by competition until the '20s, merged with its major rival (Auto Strop) in 1931. But mismanagement and a stock scandal during the '30s sent Gillette's sales tumbling, forcing the company in 1938 to hire Joseph P. Spang Jr. away from meat-packing Swift & Co. to straighten Gillette out.
Beauty Bandwagon. Looking for an advertising campaign with special appeal to men, Spang gambled on radio sponsorship of the World Series in 1939, sold so many razors the rest of the year that he committed Gillette to the sponsorship of a Cavalcade of Sports—football bowl games, weekly fights, and racing's Triple Crown. During World War II, Spang sold the Pentagon on Gillette as the standard G.I. razor, came out of the war with 16 million permanent customers. With the domestic market nearly saturated, Gillette overhauled its overseas operations (which today account for 50% of the company's profits), in 1948 began to diversify by spending $20 million for the Toni home permanent company and getting aboard the home-beauty bandwagon. While pushing Gillette's sales from $17 million to $200 million, Spang looked around for an heir apparent, found him in Gillette's Boston law firm. After rising from National Guard private to light colonel and winning a chestful of medals in the Pacific, Carl J. Gilbert had returned to his law partnership disenchanted with the law. "Fussing over a comma with a roomful of lawyers," he says, "didn't seem so important after being shot at." Spang hired Gilbert as Gillette's treasurer, in 1956 made him president and in 1958 chief executive officer.
Smooth Kisser, Buddy. Spang and Gilbert continued to diversify, bought Paper Mate pens in 1955 for $15 million, began to market a line of proprietary drugs (Thorexin, cough syrup and cough tablets) in 1957—and continued bringing out a stream of toilet accessories (latest: an aerosol deodorant) to boost Gillette sales. To combat the inroads of electric shavers, Gillette's technicians went to work to perfect a sharper, smoother-cutting Super Blue Blade (by chemically treating the edges of the steel). Introduced last year, the Super Blue now accounts for 45% of Gillette's blade sales in the U.S. Once a major threat to Gillette, electric shaver sales have fallen from a high of $138 million in 1956 to $100 million last year. To maintain its preeminence, Gillette aims much of its annual $35-$40 million advertising budget to wooing new shavers. Sunday comic sections are saturated with ads, and jive-talking disk jockeys ad-lib the merits of a "smooth kisser for the cool chick, young buddy." For as Carl Gilbert well knows, today's peach fuzz is tomorrow's 5 o'clock shadow.
From the Mar. 2,
1925 issue of TIME magazine :
In the field of specialty manufacturing, few U. S. concerns can equal the extraordinary success of the Gillette Safety Razor Co., as the Company's 1924 statement goes to show. Last year, the Company's net profits after taxes, reserves, etc., amounted to $10,122,473. compared with $2,427,174 in 1915. The sales of Gillette razors last year totaled 8,438,576, against 451,861 in 1915, while the sale of extra blades aggregated 42,604,498 tens, against only 5,928,117 dozens in 1915.
This steady and very great expansion has resulted from manufacturing and selling efficiency and world-wide advertising, rather than from patent protection. One advantage in this business is that every owner of a Gillette razor becomes a steady customer for Gillette blades.
The prosperity of the Gillette Co. has been shared in by its stockholders. Until 1917, the Company was a rather close corporation. In that year, however, it offered to the public its common stock at $80 per share. In February, 1920, stockholders were offered the right to subscribe to new common at $100, on the basis of the new share per ten old shares. On Nov. 1, 1924, a stock dividend was declared and, on Dec. 1, the company was recapitalized. For an investment of $8,000 in September, 1917, and $1,000 more in February, 1920, the investor's holdings of the stock at a recent date would have possessed a market value of $59,087—an appreciation in principal of 555%. In addition, cash dividends meanwhile would have totaled $9,673, or about 14% on the cash investment.
From the Dec. 1,
1930 issue of TIME magazine
In all the world there are 800,000,000 males with shaveable beards. Only one-third of these are in the condition called "civilized." Hence a great majority of the world's male population is still a potential new market for razors. And in the U. S. alone every year, 400,000 youths gaze into a mirror and realize they have come of shaving age. For many a year Gillette Safety Razor Co., oldest in its field, has led all competitors in supplying existing markets, and in prying into new markets.
In South Boston last week some 200 persons gathered in the big Gillette recreation hall. They were owners of 242,000 Gillette shares, also held enough proxies so they had 1,545,000 votes out of Gillette's total 1,982,000 shares. By the overwhelming tally of 1,399,654 to 895 they approved Gillette's expensive acquisition of AutoStrop Safety Razor Co. (TIME, Oct. 27). Gillette thus retains the supremacy which AutoStrop's patents threatened. And gratifying to Gillette stockholders was the news that the New York Stock Exchange, reported displeased by the great publicity regarding Gillette's accounting, had consented to list the new stock to be issued in the transaction.
Although last week's vote assures consummation of the deal it does not remove two ugly thorns from Gillette's venerable hide. First of these thorns is the widespread knowledge that Gillette's reported profits for the past several years were not all real profits. Sales to foreign subsidiaries were billed at prices just under the U. S. market price, apparently for the purpose of letting the profit fall to the U. S. company at once to avoid high foreign income taxes. If all the razors and blades sold to subsidiaries had been resold to the foreign consumers at once, the profit would not have been overstated. Upon readjustment of the figures to a fully consolidated basis, accounts receivable shrank from $17,000,000 to $4,000,000 while inventories soared from $5,000,000 to $12,000,000. The total profits from 1925-29 under the old system were $69,500,000, an overstatement of $11,000,000. This sum was subtracted from Gillette's surplus, as was $4,600,000 used to develop the much advertised new razor and blade.
The second thorn concerns the act of Gillette directors in selling stock to the company at a price far in excess of the present market. A group of minority stockholders sued for damages because of this, threatened to restrain the merger until they were assured that approval of the deal does not waive the directors' liability. The directors claim that all but one have taken back the stock at the same price the company paid, that the single exception is King Camp Gillette, who last week was too ill to be approached on the subject.
From the Sep. 1,
1930 issue of TIME magazine
Gillette. After two days of heavy selling pressure had knocked Gillette Safety Razor Co. stock down $15 a share last week, bankers for the company announced that merger negotiations are still being carried on with Auto Strop Safety Razor Co., and if concluded will be presented to the Federal Trade Commission. Although a Gillette-Auto Strop merger would settle the suit in which Auto Strop charges that Gillette's new blade is an infringement of Auto Strop's patented Probak blade, it would not end Gillette's troubles. Last week Segal Lock & Hardware Co., potent gadgetmaker, was well along with an advertising campaign for Segal Razor Blade, patents pending. While this new blade is being introduced only in New York at present, Segal plans a national campaign in the near future, may harass both Gillette and Auto Strop.
Glue Retrenchment. Better to concentrate on the glue business, American Glue Co. last week announced plans to sell its gelatin plants and business to a subsidiary of Eastman Kodak Co. for $2,300,000. Previously, Eastman was one of American Glue's biggest gelatin customers. This follows closely on American Glue's sale of its abrasive business to Minneapolis Mining & Manufacturing Co. and Carborundum Co.
More Power to Insull. Samuel In-sull's Middle West Utilities Co. controls National Electric Power Co. National controls New England Public Service Co., which, in turn, controls Cumberland County Power & Light Co. Last week, through a deal in which Cumberland figured, Utilities Insull became more potent in New England.
Like many another New England mill, Pepperell Manufacturing Co. has power plants, water power rights. Last week it was announced that Cumberland plans to buy $2,400,000 worth of these non-milling assets from Pepperell. Millside power properties have played a large part in Mr. Insull's conquest of New England territory. In some cases he has bought the mill as well, running it through depression to boost power earnings. But last week he did not have to go further into the textile business. Pepperell, with such specialties as Lady Pepperell Sheets, makes money, last year made $1,114,280, can stay on its own feet.
Warner, Fox. Weird among U. S. industries is the cinema business. Last week Warner Bros., until recently considered healthy and prosperous, suffered a new ailment and Fox Films, recently almost fatally ill, was shown to be practically cured.
The new Warner ailment was a suit for receivership, brought by a 300-share Boston stockholder who alleged mismanagement and excessive prices paid for real estate and theatres. President Harry M. Warner immediately declared that the suit was solely for the purpose of driving the stock even lower than it has been.
Fox's remarkable convalescence under President Harley L. Clarke was shown by its earning $7,125,000 in the first six months, a 40% gain. Saying that earnings for the current half year will be even greater, President Clarke assured stock-holders that the $4 dividend is safe.
From the Feb. 18,
1935 issue of TIME magazine :
¶Last autumn the American Institute of Food Distribution estimated that the 1934 tomato pack would be up some 20%, the corn pack 20%, the pea pack 15%, the string bean pack 9%. The Alaska salmon pack was the biggest on record. All during summer and autumn Drought dropped into the can-makers' laps orders for hundreds of millions of cans for the meat which the Government was tinning for the unemployed. Last week Continental Can Co. announced that 1934 had been the best year in history, with profits of $10,707,000 against $7,547,000 in 1933.
¶Almost the only thing about Gillette Safety Razor Co. and Gillette blades which has not been changed since Depression is the bewhiskered photograph of King C. Gillette, who died in 1932. With most of its patents long exhausted, the company was reorganized after merging in 1930 with AutoStrop Safety Razor Co. when AutoStrop's subsidiary, Probak Corp., produced a blade that exactly fitted Gillette razors. Last year, despite heavy inroads of cheap competing blades and a reduction in the price of both Gillettes and Probaks, Gillette Safety Razor Co. earned $4,188,000 against $3,659,000 (unaudited) in 1933.
From the Aug. 24,
1931 issue of TIME magazine :
Segal v. Gillette
Once again last week were attorneys for Gillette Safety Razor Co. busy looking up law, preparing briefs. A $1,500,000 damage suit was filed against the company by Segal Lock & Hardware Co. of Manhattan, loud in its charges that Gillette has violated anti-trust laws. And Gillette filed a suit against Segal charging infringement of blade patents.
Last Gillette suit was the action & counter action with United Cigar Stores, settled out of court by a $1,900,000 payment to United (TIME, Aug. 3). Most famous Gillette suit was that brought by AutoStrop Safety Razor Co., resulting in a merger of the two companies (TIME, Oct. 27). Still pending is the suit of minority shareholders against the Gillette directors (TIME, July 20). Last week President Louis Segal remained serene. "I do not attach much importance to the action which has been taken by Gillette Co.," said he. Representing Segal is one-time Federal Judge Hugh Martin Morris who was counsel for United Cigar Stores against Gillette.
From the Feb. 27,
1928 issue of TIME magazine :
Though Edison invented phonographs, his face is not yet as familiar in far-off lands as is that of a small, white, listening dog. Thus is injustice done to inventors. Was injustice done, last week, when Chairman John E. Aldred of the Gillette Safety Razor Company announced that the value of its patents had been suddenly written down from $3,459,500 to $1? Did that imply that the ideas of Inventor King Camp Gillette are now worth one hundred cents?
Friends of Chairman Aldred smiled a negative. When he backs an inventor he does not disparage him, does not deal in little white dogs. Financier Aldred backed Mr. Gillette when he was a poor Socialist. On him he conferred eternal youth, insofar as that can be done by printing upon millions of razor-blade cartons a picture of King Camp Gillette taken in 1901. Today Mr. Gillette has prospered so greatly that he owns a California estate where cattle and oranges are bred and grown "for fun." He was pleased last week by the value of one hundred cents set on Gillette patents. The chief effects are two: 1) to cut down taxes on the declared "worth" of the patents; 2) to prove that the Gillette company has no need to bolster its assets-column with the figure $3,459,500.
Notice of the writing down was given, last week, in an annual statement which was unique in the number of pungent details. Some of them: 1) Capital stock and surplus, $43,760,162.39; 2) Earnings for 1927 were $14,580,902 as against $13,-311,412 for 1926; 3) Of sales progress the statement said with a lofty wobble, "Business conditions in America were somewhat varied, but the foreign business showed steady growth;" 4) "Surgeons' knives, chisels, office-knives and twine-cutters have been added to our line during 1927;" 5) "We regret to record the death during the year of one of our oldest directors, Mr. William A. Gaston. Mr. John Gaston, his son, has been elected a director to succeed him."
From the May 24,
1948 issue of TIME magazine :
Not So Sharp
Said an Eversharp bigwig: "Dealers are killing us, screaming and tearing us apart for more ball-point pens." That was just eleven months ago. Last week it looked as if Eversharp had gotten another kind of tearing-apart. Board Chairman Martin L. Straus reported that his company (which had had to borrow $3,000,000 to carry it through) had closed its fiscal year with a $3,416,985.23 deficit. The trouble: ball pens.
When it bought the Biro ball-point patents for $1,600,000 (TIME, Nov. 12, 1945) et seq. Eversharp hoped to capture the pen market. But many another company, notably Reynolds Pen, got there first and skimmed the cream off. When Eversharp did get its pen out, it ran into the same trouble that plagued the other ball-point penmen: the pen did not write well.
Eversharp brought out new models, improved the Biro system, and lost money replacing the insides of its pens free of charge. Furthermore, it spent heavily on plants to meet the demand that ballooned during the ball-point fad. It fell hard when the balloon burst.
But Board Chairman Straus thought that Eversharp had learned its lesson. It had "expended so great a portion of its time and attention in solving the problems of the ball-point pen that certain developments in its conventional . . . business were, perhaps, under-emphasized." From now on, Eversharp was going to concentrate on its conventional business. The trade thought this meant that Eversharp was going to get rid of some of its plants, plug its mechanical pencils, standard pens and Schick razors.
From the Apr. 28, 2003 issue of TIME
Europe magazine : A
Sensor 3 marks a strategic change for Gilette
Razor companies want more money out of shavers. But do shavers really want triple-blade disposables?
By PETER GUMBEL/PARIS
How can you get people to pay more to shave? That's the eternal question in the $6-billion razor business. Hair grows at the same rate year in and year out, and there are few activities more banal than shaving. But the Big Three razormakers — America's Gillette and Schick and France's Bic — have all come up with a cheeky answer; the very same cheeky answer. And so, after years of relatively peaceful coexistence, competition among them is about to become cutthroat.
The three firms have jostled for shelf space for three decades, but in the past they relied on different marketing niches with limited overlap. Market leader Gillette, with $3.4 billion in annual razor and blade sales, has put its recent emphasis on reusable razors that require pricey blades, for example, while Bic has banked on cheap disposable ones. But now they're on a collision course, as all three begin marketing disposable three-blade razors. Schick's Xtreme 3 was the first to arrive on the market several months ago. The Gillette Sensor 3 and Bic Comfort 3 recently began shipping to distributors, and they're expected to appear in stores in Europe and the U.S. over the next two to three months.
Gillette and Bic both say the timing of their almost-simultaneous launch is coincidental. But a lot is at stake for all three companies, who are cranking up their marketing machines for TV and print ad campaigns later in the year. Disposable razors account for about 70% of the wet-shave market in volume terms, but only 30% of the value. Hence the need to milk more money out of disposable razor users. No one knows if the three-blade gimmick will work, or whether the competition will be as fierce as in the mid-1970s, when Bic first introduced disposables, sparking a huge catch-up effort by Gillette and some bitter lawsuits. But Bruno Bich, Bic's chairman and chief executive, promises: "It's going to be a good fight."
Round 1 will be price. Gillette is pricing its version at about ?1.50 apiece, slightly higher than Schick (known in some parts of Europe as Wilkinson Sword), while the new Bic is expected to retail at around j1 apiece. That's less than its rivals, but four times the price of its basic one-blade disposable.
Focusing on a disposable razor marks a change of strategy for Gillette, which has a 70% share of the world market for razors and blades. The Boston, Massachusetts, firm has been successful in persuading consumers to switch to reusable "shaver systems," including its Mach3 model, where the razor itself is virtually free but replacement blades are expensive. Mach3 became an instant hit after its 1998 launch, and the brand is now a $1 billion per year business, used by 70 million men. All companies hope the Mach3 paved the way for their new disposables by getting consumers used to a three-blade razor. But even in the U.S., 40% of men still use disposables, and "no matter what we do, some people just won't trade up," says Gillette spokeswoman Michèle Szynal. After new management came in two years ago, the company concluded that it needed to be more aggressive in the disposable market. The ad campaign it's planning for Sensor 3 will be its first for a disposable razor in 15 years. Szynal hints at the theme: "We'll give them a disposable worth paying for."
There's change afoot at Schick, too. The company, owned by New York-based pharmaceutical giant Pfizer, makes both reusable and disposable razors, and has seen its market share fall by half over the past five years, according to market research firm Information Resources. But earlier this year, Pfizer sold Schick to battery maker Energizer for $930 million. A spokeswoman says Energizer liked Schick because razors are sold in many of the same outlets as its batteries, and the firm sees good opportunities to grow worldwide.
Bic may have the most at stake. Razors are the third and smallest division of the family-controlled company, which made its money with disposable pens and lighters. It hopes to benefit as much from rivals' marketing as its own. The company is initially producing the razors in Greece and ceo Bich says the biggest short-term risk is not keeping up with demand. Stéphane Radiguet of Deutsche Bank says Comfort 3 is crucial for improving Bic's profit margins. "It needs to work," he says.
Consumer reaction remains to be seen, but the industry's march of progress is easily lampooned. The Rockall Times, a satirical website, recently posted a spoof news item about the inevitable next phase of razor technology: "Scientists working on the enigmatically titled 'Quattro' project are playing their cards close to their chest, but project leader Carl Burgess revealed that the new razor would produce a 33% increase in shaving power." Funny — but then people used to laugh at the idea of three blades.
From the Jun. 4,
1928 issue of TIME magazine :
Happy over winning a Federal court decision, the managers of the International Safety Razor Corp. last week hastened to advertise the sale of their corporate stock. The American Safety Razor Corp. had sued the company for infringement and unfair trade practices because International had advertised that the blades it made would fit "Gem," "Ever-Ready"' and "Star" holders (all made by Ameri-can), and that its holders would use "Gem," "Ever-Ready" and "Star" blades. American Safety Razor was incorporated in Virginia in 1919. William Crapo Durant is one of its directors. It makes 100,000,000 blades a year. Only Gillette Safety Razor Co. exceeds it in output. When American paid the makers of "Gem" $4,000,000 for their business, $3,600,000 was for "goodwill." American also bought "Ever-Ready" goodwill for $4,560,000, and the "Star" trademark for $250,000. The goodwill meant money spent advertising those razors and blades. In six years after buying these brands American Safety Razor spent $4,000,000 more on advertising. Therefore its officials were vexed with International Safety Razor for selling similar products.* They sued and expected to win. But International's lawyers thundered that American did not come into court "with clean hands." In support of this charge, they presented certain of American's advertisements to the court. One advertisement read: "Each is equipped with blades of the keenest edge —Gem Double Life Blades retail 7 for 50 cents." Another read: "Ever-Ready Radio blades possess the keenest cutting edge known to science of Metallurgy—6 for 50¢." And American's own superintendent, one Mr. Elflam, testified that "Ever-Ready," "Gem" and "Star" blades were made from the same metal and in the same way—that they were in all respects identical except for name and wrapper. American's lawyers said that all this was ordinary business puffing. All this was enough to cause Judge William Nelson Runyan of the New Jersey Federal District Court to throw out the American Safety Razor's case.
* Shrewd, International sells its blades and holders chiefly through chain and mail order stores—F. W. Woolworth; McCrory; J. C. Penney; Sears, Roebuck; Montgomery Ward; American News.
From the Sep. 12,
1927 issue of TIME magazine :
The Gillette Safety Razor Co. prints on the tasteful green wrappers of its blades, besides a handsome portrait of King C. Gillette, the words "NO STROPPING NO HONING." Timid users of Gillette blades, especially women, think these words are a command, forbidding the shaver ever to have a Gillette blade salvaged once it wears out. Other people ignore the legend or interpret it as gentle self-ingratiation by the Gillette Co., meaning, "Whoso uses a Gillette razor, he strops not, neither does he hone."
On the Gillette blades themselves, all doubt is dispelled. There the Gillette Co. abruptly says: . "Not to be resharpened." Nevertheless a certain bold percentage of Gillette users frequently have their blades honed and stropped, or do it themselves on machines made especially for that purpose.*
There is another legend on the Gillette blade wrappers, the last and smallest line of all. It needs no emphasis nor interpretation, being firm and final. It says: "Reg. U. S. Pat. Off." The company needs hardly worry for feat purchasers will defy those words.
Yet last week, detectives who followed an automobile from Irvington, N. J., † to Newark, where the men in it passed several packages to a woman in a window in a mean street; and police who later raided the so-called Peerless Blade Corporation's factory in Irvington, found the Gillette Co.'s smallest, most serious legend had indeed been defied, grossly. In the Peerless factory they found many hundreds of thousands of counterfeit safety razor blades, modeled on the Gillette design, ready to be wrapped in tasteful green wrappers with the handsome portrait and the two legends. At other hiding places, raiders seized more of the imitations; two million blades in all, which had cost perhaps $10,000 to manufacture out of cheap metal, which would have retailed as genuine Gillette blades for $150,000.
The Gillette Co. had traced the bogus blades after hearing that the South American market was flooded with them. Eight suspects were held for questioning.
*As everyone knows, safety razor manufacturers derive the bulk of their profit, not from razors, but from the replaceable blades.
† Not to be confused with Irvington, N. Y.
From the Jul 25,
1949 issue of TIME magazine :
The Razor's Edge
When Eversharp, Inc.'s stockholders walked into the Chicago headquarters for their annual meeting last week, they felt that something important was out of place. Something was. It was Eversharp's ebullient ex-chairman, Martin Straus. In place of Straus, thick-jowled R. Howard Webster of Montreal, Straus's sworn enemy, was running things. Straus had lost control of the company which, in seven meteoric years, had risen, with the help of razzle-dazzle advertising ("the $64 question"), from a $12,078 deficit to peak sales (1946) of $46 million and a $4.2 million net.
Straus's undoing was the ballpoint pen. He entered the market too late with a bad product. Eversharp lost $3.4 million in 1947; its stock fell from 25⅞ to 10¼. In November 1946, Straus had bought control of the Schick injector razor, looking for a cushion against hard times. He got a cushion all right (the razor division helped Eversharp show a $1.2 million profit last year), but there was a big pin in it. The pin was R. Howard Webster. To get the razor company, Straus had to take Webster, a big Schick stockholder, into Eversharp as a director. That was the beginning of Straus's end.
Webster, a shrewd infighter, began bucking Straus's every move. He accused him of spending Eversharp's money extravagantly, lined up other directors against him. At Webster's urging, Straus was stripped of all Eversharp control save advertising. Three months ago the directors kicked Straus out of the chairmanship by abolishing the job.
Straus maneuvered to postpone Eversharp's annual meeting while he tried to line up proxies against Webster. But last week, when the long-deferred meeting finally came, Straus could muster only about 200,000 votes against Webster's 715,379. As Straus's successor on Eversharp's board of directors, Webster brought in James D. Mooney, who had been recently booted out of Willys-Overland Motors' presidency as abruptly as Straus had been booted out of Eversharp.
From the Aug. 26,
1935 issue of TIME magazine ):
Czechoslovak glass makers whose low prices have long given competitors World headaches announced last week that the North Bohemian Works have perfected "glass razor blades, supple and sharp as steel." A glass razor blade, the Czechoslovaks boasted, achieves at last the ideal toward which all safety razor makers have been striving: It positively cannot be re-sharpened.
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