<BREAKFAST WITH THE FOOL>
Tuesday, March 30, 1999
"One who never asks either knows everything or nothing." -- Malcolm Forbes
Coca-Cola Sales Fizzle
Coca-Cola <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: KO)") else Response.Write("(NYSE: KO)") end if %> warned that it anticipates a drop in worldwide unit case volume due to weakness and currency devaluations in some of its most significant overseas markets. The world's largest soft drink maker expects case-volume sales, a key measure of its business, to "decline slightly," by 1% to 2% in the first quarter. Analysts had been forecasting those same numbers but in the positive direction. In the first quarter of last year, case sales jumped 9% on a comparable basis.
Coke, which derives three-quarters of its profits from abroad, expects a slowdown in sales in every international division -- Latin America (down 4% to 5%), Europe (down 4% to 5%), Asia and the Middle East (down 1% to 2%), and Africa (down 1% to 2%). In North America, volumes are expected to rise a mere 2% amid higher prices, compared with analysts' projections of a 4% to 5% improvement. The company said it has been hurt by "very challenging economic conditions in many key markets including Germany, Japan, South Africa, Southeast Asia, and parts of Eastern Europe."
The weak first quarter may make it hard for Coke to meet its long-standing goal of increasing sales by 7% to 8% per year. The company fell just short of the goal last year with a 6% gain. Analysts are likely to further cut their earnings estimates for Coke. Most analysts had already slashed their projections to $0.31 a share, a 9% drop from a year ago, following the company's volume and earnings warnings in September and December.
News to Go
Wal-Mart <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: WMT)") else Response.Write("(NYSE: WMT)") end if %> overtook Toys "R" Us <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TOY)") else Response.Write("(NYSE: TOY)") end if %> as the nation's largest toy retailer last year with a 17.4% market share, up from 16.3%, the Associated Press reported. Toys "R" Us saw its share of the market drop to 16.8% from 18.3%, according to market research firm NPD Group. The other top toy retailers are Kmart <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: KM)") else Response.Write("(NYSE: KM)") end if %> with 8%, Dayton Hudson's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DH)") else Response.Write("(NYSE: DH)") end if %> Target stores with 6.9%, and KB Toys with 4.9%.
Time Warner <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TWX)") else Response.Write("(NYSE: TWX)") end if %> is considering spinning out some of its Internet holdings, including CNNfn.com and its stake in Road Runner, a high-speed Internet service, into a separate public company, The Wall Street Journal reported. Merrill Lynch analyst Jessica Reif Cohen also expects Time Warner to contribute its music-retailing assets, which include 50% of Columbia House record club, to a new online music retailer.
The nation's fourth largest bank, Bank One Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ONE)") else Response.Write("(NYSE: ONE)") end if %>, is cutting up to 4,700 jobs, or 5% of its workforce, as it integrates the operations of recently acquired First Chicago NBD. The company expects to take $526 million in merger-related charges this year on top of a pre-tax $984 million charge in the fourth quarter of last year.
High-flying casual apparel retailer American Eagle Outfitters <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AEOS)") else Response.Write("(Nasdaq: AEOS)") end if %> announced a 2-for-1 stock split, effective May 3.
Investment banking firm Goldman Sachs said it will buy a 22% stake in Internet initial public offering company Wit Capital Group for an undisclosed price, according to The New York Times. Both firms are planning their own respective IPOs.
Pharmacy benefits manager Express Scripts Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ESRX)") else Response.Write("(Nasdaq: ESRX)") end if %> announced plans to launch two websites in the second quarter of this year: YourPharmacy.com, which will serve as an online drug store, and DrugDigest.org, which will provide consumer drug information.
Catalog company Hanover Direct <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: HNV)") else Response.Write("(AMEX: HNV)") end if %> announced plans to divide its operations into two distinct Internet-driven divisions, brand marketing and Web services, which will report separate earnings results. The brand marketing division will comprise the company's catalog and online portfolio of apparel, home fashions, and gifts, while the Web services portion will provide such services as Internet marketing, telemarketing, order processing, credit card transaction processing, and customer database management.
Eyecare company Bausch & Lomb <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BOL)") else Response.Write("(NYSE: BOL)") end if %> said it will acquire privately held ophthalmic diagnostic technology firm Orbtek Inc. for an undisclosed sum. Bausch & Lomb said Orbtek's "unique technology is a natural addition" to the company's portfolio of refractive solutions.
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Yi-Hsin Chang (TMF Puck), Writer
Jennifer Silber (TMF Amused), Editor