DJIA 8826.90 -14.68 (-0.17%) S&P 500 1166.05 +1.03 (+0.09%) Nasdaq 2032.90 +16.94 (+0.84%) Value Line ndx 881.46 -2.61 (-0.30%) 30-Year Bond 104 4/32 -16/32 4.98% Yield
| This Feature | |
| Related Items | |
|
|
FOOL PLATE SPECIAL
An Investment Opinion
by Dale Wettlaufer
Coke Acquisition, Shareholder Kiss-Off
Hey Coca-Cola <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: KO)") else Response.Write("(NYSE: KO)") end if %> sellers, have a Coke and a smile. The Atlanta juggernaut is expanding its international lineup of beverages by acquiring the international beverage portfolio of Cadbury Schweppes <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CSG)") else Response.Write("(NYSE: CSG)") end if %>. These include the Schweppes, Dr. Pepper, Canada Dry, Crush, and regional brands outside the U.S., France, and South Africa. So, it's not as if Coke is going to assume Cadbury Schweppes' 14.5% market share here in the U.S. or take its 7-Up and A&W root beer brands, but the $1.85 billion deal does improve Coca-Cola's international brand stable. While the world is Coca-Cola's oyster and the taste of Coke seems adaptable to almost any culture's palate, the Coke taste is still not a total layup. Pepper soft drinks and ginger ales add another dimension to Coca-Cola's strengths in distribution and marketing.
The other big news from Atlanta today was that Coke expects to report fourth quarter EPS of $0.24 to $0.25, down from last year's $0.33 and below the I/B/E/S mean estimate of $0.30. But that's pretty much all the news I can get on the subject. In what may be a violation of Securities and Exchange Acts provisions on selective disclosure, Coca-Cola provided the world with the good news today and only presented the bad news to the analysts covering the company. According to Reuters, whose reporter asked one of the analysts who attended, the company told analysts in a meeting this morning that it expects international growth to accelerate in 1999. Interesting that Coca-Cola Co. thinks it's an effective tool of communication with its shareholders to let such vital information on the company go through two or more parties before the average shareholder receives it. That is especially surprising considering that CEO Doug Ivestor is a communications fanatic.
What should shareholders do about this? Put in a polite phone call to Atlanta, as the Fool has done in the past, asking if the company will increase access to the information that they withhold from their owners? That really hasn't worked too well. Should we call the SEC and put in a complaint about possible violations of federal securities laws? Or should we hire a legal team to investigate this and start a class action against the company? If I were a shareholder, I would like to ask where the bright spots are and where the larger problems are; whether it is volume trends we should be thinking about or pricing trends; whether it is market share trends or problems with international bottlers; and other things that might be asked by representatives of the people selling their shares over the last couple days.
Bloomberg has gotten its pants in a bunch over the issue of selective disclosure lately, but what I'm saying has nothing to do with the freedom of the press. It has to do with a company communicating with one group of shareholders and excluding another big group of shareholders. I would say to Coke, take a look at the Securities and Exchange Acts of 1933 and 1934 and see if there's anything that proscribes this activity. If you're a Coke shareholder or even if you're not, feel free to call the company at (404) 676-2121. Also, please send us an email telling us what you think of the idea of a possible shareholders' legal action against Coca-Cola for its selective disclosure.
Database software giant Oracle <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ORCL)") else Response.Write("(Nasdaq: ORCL)") end if %> gained $2 11/16 to $37 5/8 after posting fiscal Q2 EPS of $0.28 last night, beating last year's results by $0.09 and the First Call mean estimate by $0.04. The company's database business saw revenues grow 25% year-over-year during the quarter, to $1.5 billion, while applications sales grew 35% to $578 million.
Clinical trials of Eli Lilly & Co.'s <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LLY)") else Response.Write("(NYSE: LLY)") end if %> osteoporosis drug Evista showed a 55% reduction in the risk of breast cancer after more than three years of use by women, The Wall Street Journal reported, causing the Indianapolis-based drugmaker's stock to pop up $3 3/16 to $90 this morning. The trials involve 10,575 women and have shown about 1.7 cases of breast cancer per 1,000 women taking Evista compared with 3.8 cases per 1,000 women taking a placebo.
Information technology services company Electronic Data Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: EDS)") else Response.Write("(NYSE: EDS)") end if %> rose $2 1/4 to $43 after late yesterday naming Cable & Wireless CEO Richard Brown as its new chairman and CEO, effective January 15, to replace long-time skipper Les Aberthal, who is retiring. In his 29 months at Cable & Wireless, Brown brokered some 21 deals valued at more than $20 billion, most recently the purchase of MCI WorldCom's <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: WCOM)") else Response.Write("(Nasdaq: WCOM)") end if %> entire Internet backbone and client base.
Shareholders of biopharmaceutical company Oxigene Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: OXGN)") else Response.Write("(Nasdaq: OXGN)") end if %> breathed easier this morning as the stock rose $1 1/16 to $9 7/8 after researchers reported that the company's Declopramide compound caused cell death by two separate mechanisms in recent study, which the company says supports the proposed use of the drug as a supplement to traditional radiation cancer treatment.
Anatomic pathology physician practice management firm AmeriPath Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PATH)") else Response.Write("(Nasdaq: PATH)") end if %> trekked $2 25/32 higher to $9 17/32 after Medicare said it will not hold the company liable for the refund of $2.95 million in alleged over-payments. The company's shares have fallen 26% since Medicare initially requested the refund on Nov. 23.
Wireless communications radio frequency integrated circuits designer RF Micro Devices <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RFMD)") else Response.Write("(Nasdaq: RFMD)") end if %> jumped $8 5/8 to $44 3/4 after saying higher-than-expected revenues and gross margins will produce fiscal Q3 EPS between $0.26 and $0.28, topping the $0.15 the company said analysts had been expecting.
Steak and ribs restaurant operator Logan's Roadhouse <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RDHS)") else Response.Write("(Nasdaq: RDHS)") end if %> brawled its way $2 3/16 higher to $23 1/4 after agreeing to be acquired by fellow restaurant company Cracker Barrel Old Country Store <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CBRL)") else Response.Write("(Nasdaq: CBRL)") end if %> for $179 million, or $24 per share in cash. Cracker Barrel expects the deal to be neutral to its fiscal 1999 earnings but accretive in fiscal 2000.
Computer reseller MicroAge <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MICA)") else Response.Write("(Nasdaq: MICA)") end if %> picked up $2 3/8 to $17 7/8 after pre-announcing fiscal Q4 EPS between $0.15 and $0.18 on revenues "above" $1.5 billion. The First Call mean estimate had called for EPS of $0.14 in the quarter.
Telecommunications dense wavelength division multiplexing (DWDM) systems designer Ciena Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CIEN)") else Response.Write("(Nasdaq: CIEN)") end if %> sank $1 7/16 to $15 15/16 after reporting a fiscal Q4 loss of $0.03 per share (excluding charges) compared to earnings of $0.37 per share last year. That was a tad better than the loss of $0.04 per share expected by analysts surveyed by First Call. However, the company warned that higher costs from product development, selling, marketing, and customer service initiatives could result in operating losses "during at least the first half of fiscal 1999."
Wireless and mobile information systems developer Telxon Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TLXN)") else Response.Write("(Nasdaq: TLXN)") end if %> tanked $11 3/16 to $16 1/16 after saying it will restate its fiscal Q2 revenues to $110 million from the previously reported $124 million to take into account revenue recognition concerns under a new financing program with distributors. Most of the $14 million revenue difference will be booked in Q3, with the remaining amount being recorded in Q4. Due to the adjustment, the company ended up with a fiscal Q2 loss of $0.05 per share compared to the earnings of $0.22 per share announced in October. Separately, the firm expects fiscal 1999 revenues to be flat with 1998's $466 million.
Swedish telecommunications equipment maker Ericsson <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ERICY)") else Response.Write("(Nasdaq: ERICY)") end if %> lost another $1 3/16 to $22 15/16 after falling 16% yesterday following its warning that fiscal 1998 earnings and revenues will be "somewhat below market expectations" due mostly to the recent global financial crisis.
Biopharmaceutical firm Aviron <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AVIR)") else Response.Write("(Nasdaq: AVIR)") end if %> moved down $2 3/16 to $20 7/8 after the FDA required the firm to complete an additional study of its FluMist inhalable flu vaccine before considering the product for possible approval. The company said it wants to submit its revised application for the product by the summer or fall of 1999, leading some analysts to believe that the product will not be on the market until the 2000 flu season at the earliest.
American Airlines parent AMR Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AMR)") else Response.Write("(NYSE: AMR)") end if %> descended $3 13/16 to $58 11/16 after reportedly warning analysts that slowing revenues in October had carried over into November, putting the $1.35 per share First Call mean earnings estimate for Q4 into doubt. Merrill Lynch, Goldman Sachs, BT Alex. Brown, and Morgan Stanley Dean Witter were among the firms reducing their Q4 earnings estimates for the airline this morning.
Hardware, home furnishings, housewares, and office products manufacturer Newell Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NWL)") else Response.Write("(NYSE: NWL)") end if %> slid $4 7/16 to $36 15/16 after saying lower-than-expected housewares and office products sales will result in Q4 earnings between $0.56 and $0.61 per share, falling short of the $0.67 per share the company said analysts had been anticipating. The company tried to dampen the blow somewhat by adding that it is confident 1999 "will be a strong year." Merger mate Rubbermaid <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RBD)") else Response.Write("(NYSE: RBD)") end if %> slipped $3 9/16 to $27 11/16.
Cancer diagnosis and treatment information provider IMPATH Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: IMPH)") else Response.Write("(Nasdaq: IMPH)") end if %> tumbled $17 3/4 to $21 1/4 after stating its fiscal 1998 earnings will be 45% to 60% greater than the $0.58 per share reported last year. That's a cute way of saying earnings will be in the $0.84 to $0.93 per share range, which is below the First Call mean estimate of $0.96. The company added that it has seen a 7% decline in revenue recognition per case in its diagnostic and prognostic business in Q4, due in part to stronger growth in its lower-yielding hospital-based business than in its higher-yielding oncology office-based operations.
A trio of semiconductor capital equipment companies dropped this morning on downgrades from Morgan Stanley Dean Witter. Excimer laser company Cymer Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CYMI)") else Response.Write("(Nasdaq: CYMI)") end if %> was zapped $1/4 to $17 1/16 after receiving a downgrade to "neutral" from "outperform." Assembly equipment firm Kulicke & Soffa <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: KLIC)") else Response.Write("(Nasdaq: KLIC)") end if %> dropped $1 7/16 to $18 3/16 and automated fabrication systems developer PRI Automation <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PRIA)") else Response.Write("(Nasdaq: PRIA)") end if %> fell $1 1/4 to $22 1/8 on a pair of cuts to "neutral" from "outperform."
Please see the Motley Fool's Conference Calls page for call information and links to synopses.
Click here for continually updated Portfolio Numbers.
See something moving a stock that we didn't cover?
E-mail the Fool News Team
and we will start working on the story.
Unfortunately, we cannot answer every e-mail
or respond to individual questions.
|
Contributing Writers Yi-Hsin Chang (TMF Puck), a Fool Brian Graney (TMF Panic), another Fool David Marino-Nachison (TMF Braden), a new Fool
Editing |