Travis Kalanick’s Not-So-Fond Farewell; It’s Bottoms Up for George Clooney; Glassdoor Drops Another List and You Better Hope Your Boss is on it

Goodbye and farewell…

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Looks like Travis Kalanick’s “leave of absence” is now a permanent one as he finally took the hint from investors and officially resigned as Uber’s CEO. But not before the aforementioned investors placed a lot of pressure on the embattled CEO to step down. And who can blame the investors. Scandal after ugly scandal emerged from the $68 billion, privately held company and it seemed as if Kalanick wasn’t up to snuff when it came to dealing with them.  In an email to employees, Kalanick talked about his love for Uber and decided to step down “so that Uber can go back to building rather than be distracted with another fight.” How very gallant of him. While Kalanick still remains on the board of Uber, the business is now being run by fourteen people who once upon a time reported to him. Talk about irony.

Aye tequila!

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Some guys have all the luck and George Clooney is one of them. If you think he’s just an actor with a pretty face then you are so very wrong. Turns out the Hollywood hunk also has his own tequila brand –  along with two other partners – called Casamigos, which was just bought for $1 billion by liquor company giant Diageo. The name Diageo might not ring a bell for you, but the name Smirnoff should, and that is just one of the many notable brands that belongs to the Diageo family. Curious who George’s other partners are? Mr. Cindy Crawford, aka Rande Gerber and Mike Meldman. Annoyingly enough, Clooney and Gerber were just trying to come up with their very own “house” tequila for the properties they own in Cabo San Lucas.  But a very lucrative opportunity knocked that had them expanding the brand beyond Cabo, and just last year 120,000 cases of the stuff was shipped out. This year the company expects that number to climb to 170,000. And with a price tag between $45 to $55 a bottle, Clooney and company get to live large without having to rely on other their other talents, including acting and such. As for Diageo, you can bet that this acquisition had less to do with Clooney’s movie star charm and more to do with the fact that tequila volume in the U.S. more than doubled from 2002 to 2015.

There’s a list for that too…

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Glassdoor has regaled us with yet another list. This time it’s to let us know who the top CEO’s in the world are, according to employees And you can bet Travis Kalanick did not make the cut. The Clorox Company’s Benno Dorer takes the top spot. What? Were you expecting a tech CEO? Well too bad because Dorer earned a 99% approval rating from his employees.  Another name from the list you might recognize is Elon Musk who takes the eighth spot. Interestingly enough, his 98% employee approval rating came not from Tesla, but his other company, SpaceX. Wonder what that’s about. Facebook’s Mark Zuckerberg makes it onto the list at number ten, also with a 98% approval rating. But sadly that’s a sharp drop from his number four spot in 2016. Google’s Sundar Pichai grabs the 17th spot while LinkedIn’s Jeff Weiner comes in at number 35. The biggest bummer on the list just might be Apple’s Tim Cook. Last year he held the number eight spot, but this year he drops to spot number 53. In all fairness, however, he still scored a 93% approval rating.

 

American Airlines Wants You to Fly the Cramped Skies; New York Times “Trumps” Estimates; Tesla’s Big Losses and Bigger Gains

Low-class…

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As if customers aren’t irritated enough, and because American Airlines maybe just doesn’t give a hoot, the airline just announced plans to make its flights even more cramped and unpleasant. In economy class, mind you. And this un-strategically timed announcement comes the day after airline execs took a truly deserved congressional beating over how poorly they treat those customers. American Airlines spokesman Joshua Freed said, “We believe we’re still providing a good product for customers.” Of course they do. So if you didn’t feel squeezed and claustrophobic enough before, you can now look forward to even 1-2 inches less of legroom. In fact, that will leave so little legroom, that it will almost put American Airlines in the same legroom class as low-cost carriers like Spirit Airlines and Frontier Alines. That’s classy, alright. What’s worse, is that if American Airlines ends up getting away with these new seating arrangements, then you can expect other major airlines to follow suit. Because that’s how these cats work.

Sign of the “Times”…

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The New York Times whipped out some impressive earnings this quarter and they can thank its very own Public Enemy Number One: President Donald Trump. Oh, the irony.  The Newspaper of Record took in 308,000 new digital subscribers, a 60% increase over last year that marked the company’s best-ever quarterly growth, and now brings its total digital viewership to 2.2 million subscribers. But then it gets even more interesting. Print ad revenue took an 18% dive since apparently a lot of companies just don’t see the value in placing ads in newspapers anymore. However, lo and behold, digital ad revenue was up 19%. See how well that worked out for the media company? Even its revenue grew 5% to almost $400 million, with the company picking up 11 cents per share, a whole penny more than last year at this time. Bonus: it beat estimates of 7 cents per share. Despite the President’s insistence that the company is failing, the fact – not an alternative one, mind you – is that it enjoyed its best quarterly revenue growth in six years. Naturally, shares rose 12% on the not fake news.

Solar-ious…

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Tesla whipped out some quarterly earnings that were not exactly electrifying, given that it had losses that were much much bigger than expected, but also not bad. At all. The company took a $1.33 hit on it earrings, when estimates were for a less severe 83 cents per share loss. That’s where the bad news ends. Revenue came in at $2.70 billion, more than double last year at this time, and nowhere near the expected $2.61 billion. But then we get to the part about vehicle deliveries. Tesla delivered a record breaking 25,000 cars, a number that sent shares of the company up up and away. It was that impressive of a number. Elon Musk made sure to rub that into the faces of traders who were shorting the stock by tweeting, “Stormy weather in Shortville…” That’s just trading humor on Wall Street. Anyway, the stock is up 46% in the last twelve months, so they must be doing something right over at Tesla. One can only hope…

You Bacon Believe It! It’s Getting A Lot More Expensive; Tesla’s Going Through Some Changes – Whether You Care or Not; Hip-Hop Mogul Takes Rap for Debit Card Glitch;

This little piggy…

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Savor that bacon while you can. Or rather the price of it. The price of pork belly increased 20% just in the first three weeks of January. It seems the supply of frozen pork belly, which is essentially bacon, is shrinking. Rapidly. In fact, according to U.S. agricultural data, pork belly levels are at a fifty year low, having fallen from 53.4 million pounds in December of 2015 to 17.8 million pounds in December of 2016. But what’s weird is that pig farmers are actually producing more pigs.  Apparently, supply is dwindling because demand is pretty big, not just in the U.S., but also outside the U.S., as pig farmers here find themselves exporting 26% of their product. Bon appetite!

Say my name…

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A Tesla by any other name might not be a Tesla. Or might it? Hmmm. According to a regulatory filing, Tesla Motors CEO Elon Musk changed the name of his company from Tesla Motors to…wait for it… Tesla Inc. Really. That’s it. Anti-climactic, huh? Musk decided to drop the word “Motors” lest people think the company only makes cars. Because it doesn’t. It also has a whole big solar power business too. If you recall, Musk brought in his other company, SolarCity, into the Tesla family back in November, to the tune of $2 billion. It was undoubtedly a big bonus for Musk that he already owned 20% of both companies, which probably helped the deal close more swiftly. He wants Tesla to be the known as a one-stop shop for products that utilize clean, renewable energy.  And he’s well on his way towards achieving that goal.

No need to rush…

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Hip hop mogul Russell Simmons is making some headlines today in the finance world. It seems the debit card company he founded called “RushCard” was just slapped with a very nasty $3 million fine following a 2015 outage that left its customers unable to access their cash.  But RushCard, together with its payment processor, MasterCard, also has to pay about $10 million in restitution to the customers who were left in a very big lurch because of the system failure.  The Consumer Financial Protection Bureau explained that back in 2015, RushCard wanted to switch its payment processor to MasterCard which would require a simple software upgrade. Except it didn’t work out so simply and the system went down leaving thousands of RushCard holders unable to access their cash, make deposits or get their balance information. What’s worse is that because many RushCard holders tended to be in a low-income bracket, and they couldn’t even afford to buy basic necessities nor access their money for days, or in some cases, weeks.  Of course, nobody should point the finger at Russell Simmons because it’s not like he was the one installing the software. But that hasn’t stopped him from taking personal responsibility and even using his own funds to help out some of the affected RushCard customers. Affected customers will receive awards based on the transactions they made, deposit delays, returned deposits and incorrect balance information.  In the meantime, RushCard has since been scooped up by pre-paid debit card company GreenDot for $147 million. And no, GreenDot will not be paying any of  RushCard’s fees and fines.

Tesla Deliveries Anything But Electrifying; Sec’y of State Nominee’s Future Looks Green; Trump’s SEC Chairman Pick

Not electrifying…

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Tesla’s fourth quarter sales rose 27%, yet deliveries fell short with CEO Elon Musk pointing to production delays. And Tesla didn’t fall short according to Wall Street’s predictions but rather its very own.  It may seem like a convenient excuse, but it’s a valid one that was also used to blame the company’s second quarter shortcomings. The electric car company delivered 22,000 cars in its last quarter, which was over 5,000 more than the same time last year. That might seem awfully impressive except that Tesla wanted that figure to top 25,000 vehicles. So now, that 3,000 car miss becomes an ugly smudge on the company’s fourth quarter earnings report. Tesla’s grand total of car deliveries for the year hit over 76,000. But once again, because Tesla went ahead and predicted that number would hit 80,000, it disappointed only itself.  Setting forecasts he just can’t meet is a nasty habit that Elon Musk can’t seem to break.  Production delays or not, maybe Tesla’s should stop trying to predict the future.  Shares were down 11% for 2016 which marks the first time that Tesla reported an annual decline since its 2010 IPO. But miraculously those shares still rose today because Wall Street clearly has a thing for Elon Musk. Well, his company, anyway.  Wall Street and consumers alike are waiting with bated breath to see if the much anticipated $35,000 Model 3 will actually surface this year. Some experts, however, think the more affordable model will only be making its grand debut in 2018. That still has’t stopped loyal Tesla buyers and enthusiasts from shelling out a total of $350,000 worth of deposits for the car.

Hatched…

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President-elect Donald Trump’s pick for Secretary of State, Rex Tillerson, reached a very lucrative retirement deal with ExxonMobil. If Tillerson does in fact get confirmed – and that’s still kind of iffy – then he’ll walk away from his post with $180 million comfortably nestled in a trust account. And that’s the approximate value of Tillerson’s 2 million deferred shares of the energy giant. Because he would not be allowed to own shares of the company if he took the post, the shares would get cashed out and put into an independently managed trust account. Besides dumping his ExxonMobil shares, Tillerson will not be allowed to work in the oil and gas industries for a period of ten years. Plus, he has to give up a cash bonus and other benefits that are worth another $7 million because he won’t be there in March, when he’ll have reached the company’s official retirement age that affords him the opportunity to collect on that $7 million package. But, that $180 million ought to tide him over. He’ll also need to agree to sever ties in order to avoid any conflicts of interest. Should he decide to return to the industry, then all that money would be given to charities of the main trustee’s choosing. But I did write that his confirmation is”iffy” because there are plenty of Congressional members who aren’t down with Tillerson’s cushy relationship with Russian president Vladimir Putin. That’s going to come up a lot during the confirmation hearings and it’ll probably be ugly, if not wholly entertaining.

And I choose you…

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Trump just announced his pick for Securities and Exchange Commission Chairman and it’s one that should surprise…no one. Enter Jay Clayton, a lawyer with the law firm Sullivan and Cromwell, who has plenty of experience with banks. Well, representing them, anyway. Besides banking clients, Clayton also defended a variety of “large financial institutions” against such entities as the Department of Justice, other government agencies and regulators and – get this – even the SEC itself.  Some of his more notable achievements include representing everybody’s favorite Chinese e-commerce giant, Alibaba, when it made its grand IPO debut. He’s also represented Barclays when it unceremoniously scooped up Lehman Brothers, and Bear Stearns when JP Morgan took it on. You didn’t think we’d leave out Goldman Sachs, did you?  Because he repped that one too.  Word on the street is that Carl Icahn interviewed Clayton, along with several other candidates for the post. Presumably the two gentlemen discussed how to best undo obstructive banking regulations, Dodd-Frank and all those other pesky rules that have been casting a major downer on the financial world.

Oil-vey! Trump’s Secretary of State Pick Putin Us On; Trump vs. Silicon Valley; Rate Hike Sends Joy Throughout Wall Street

Energized…

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Trump’s latest pick, this time for Secretary of State, has naturally already ruffled more than a few political feathers. Enter Exxon Mobil Corp. CEO Rex Tillerson, a man who happens to be very very cushy with Russia and its fearless leader, Vladimir Putin. If you recall, Russia is very brazenly messing with Ukraine, to the point where the U.S. felt compelled to impose sanctions. Now, the CIA said the country also launched cyber attacks against the U.S. in an effort to influence the election results. But that very same country awarded Tillerson the Friendship Medal in 2013.  Tillerson, who has never held a public office, has been at Exxon, the world’s largest energy firm, for 40 years and during that time spent many many hours cultivating relationships and establishing major business deals with countless foreign countries and companies. But he’ll still need to be confirmed by the Senate. However, considering that former Secretaries of State Condoleeza Rice and James Baker are big fans, not to mention Defense Secretary Robert Gates, he shouldn’t have too much of an uphill battle. By the way, Condoleeza Rice also happens to be a consultant at Exxon Mobil, and Robert Gates was a consultant at one point too. Rumor has it that they all plan to vouch for the CEO.  Lindsay Graham and John McCain, however, are just not that into him, presumably because of his chummy relationship with Putin, of whom they are not particularly fond. Also not in Tillerson’s favor is the fact that Exxon currently has billions of dollars in deals with Russia, not to mention one valued at $500 billion that involves exploring and pumping for oil in Siberia. Those deals can only go forward if the U.S. decides to lift its sanctions against Russia and, fyi,  Tillerson was never much of a fan of the sanctions. And just so you know, according to a filing from a year ago, Tillerson owns $218 million in Exxon stock along with a $70 million pension plan. Shares of Exxon Mobil went up 2.2% on the news of Tillerson’s nomination.

 

Speaking of Trump…

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Tomorrow is a big day at Trump Towers as some of Silicon Valley’s top execs head over to the President-elect’s digs for a little quality time with Donald Trump. Expected to attend the power meeting are: Apple’s Tim Cook, Facebook’s Sheryl Sandberg, Microsoft’s Satya Nadella, Amazon’s Jeff Bezos, Tesla’s Elon Musk and Google’s Sergey Brin and Eric Schmidt…to name but a few. While the agenda’s not public, there are some predictions about what might be discussed tomorrow. There’s the not-so-minor issue of antitrust enforcement and those pesky government demands for user data. But much higher on that list is Trump’s immigration policies and how they have the potential to put a very major damper on the inner workings at many of these Silicon Valley companies. The fact that these companies bring in a lot of employees on special visas, not to mention that they also send plenty of jobs overseas, doesn’t exactly jibe well with Trump’s vision of “Making America Great Again.”  To be fair, Apple did say it has 80,000 employees in the United States and is also responsible for creating another 2 million jobs from all the business opportunities Apple creates. However, Trump did say, in his very eloquent way, that he wants to “get Apple to build their damn computers and things” right here.  Donald Trump is all for establishing major tax reforms and is acutely aware that all these tech companies have a lot of cash offshore. Major reform will help bring that cash back to the States. So its in everyone’s best interests to work together towards that goal, whether they supported Trump’s presidential aspirations or not. And for the record, they did not.

Stocks, and bonds and hikes…Oh my!

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Stocks all over the world rejoiced today by going up while the Dow Jones Industrial Average came thisclose to hitting the 20,000 mark following its 9% surge since Election Day. Actually, the index came within 50 points of the 20,000 mark which sent Wall Street into fits of fiscal joy. The S&P got in on the action by going up .8% to its very own all-time high. The reason for all this excitement is because the Federal Reserve is expected to officially and finally finally announce a rate hike tomorrow, marking the second time in ten years that we get to witness and take part in that elusive increase. Rate hikes are welcome since they signal that the economy is strong and steady in all the right ways. Low interest rates have this nifty little effect on stocks that makes them cost higher. Problem is low interest rates are just no good  for the savers among us who like high interest rates because of the income they get from bonds and bank accounts.  Even though borrowing costs are about to get that much higher, investors are still positively giddy at the prospect that the President-elect intends to usher in an era of potentially lower corporate tax rates, less regulation and lots more infrastructure spending.

 

Tesla Banks a Profit. Finally; Twitter’s Getting Rid of Employees Despite a Beat; Latest IPO Fails to Wow Wall Street

Booyah!

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Tesla’s CEO Elon Musk is super-pleased with himself after his electric car company posted a quarterly profit for the second time since the company went public. The first time that happened was waaaaay back in 2013. And Musk is banking on the fact that he can pull it off again next quarter. The news was particularly welcome to Musk since he is eager to merge Tesla with his other company, SolarCity. Except investors aren’t as enthusiastic about the prospect or presumably the $2.6 billion cost of the merger. But come November 17 Musk is going to find out if shareholders will have a change of heart and are willing to embrace the move when a vote takes place. In any case, Tesla’s profit came in at a very lofty $21.9 million with a record $2.3 billion in revenue. That would be a 145% increase over last year’s same quarter revenue. Yes you read that right.  The company also scored 14 cents per share when analysts only expected 4 cents. Add that to the fact that last year the stock lost 58 cents per share and we’ve quite a nice comeback story. So what made this quarter different from all other quarters? Ramped up production of Tesla’s Models S sedans and Model X Crossovers. With Musk urging employees to move the vehicles with all their heart and soul, a 92% increase was seen on deliveries of 25,185 cars. But it wasn’t just the current crop of cars that contributed to Tesla’s winning quarter. Apparently, 373, 000 people already pre-ordered the $35,000 Model 3, which won’t even hit the streets until 2017.

Boohoo…

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Twitter announced its third quarter results and yet again, failed to impress anybody. One of the more significant highlights, or rather lowlights, is the company’s decision to lose about 9% of its workforce, or roughly three hundred employees, out of over 3,800 worldwide. That number could go higher but the ultimate goal is to help the company reorganize sales, partnerships and marketing efforts. And who doesn’t like to reorganize, right? The social media company did manage to pull down revenues of $616 million, beating estimates of $605.5 million. Some might consider that an impressive achievement. Except it’s not, since it marked Twitter’s ninth straight quarter of declining growth. And while the company also earned 13 cents per share, once again beating estimates of just 9 cents, growth of monthly active users stayed relatively flat, despite all kinds of exciting new changes.  In the meantime, both Disney and Salesforce.com have passed on potentially acquiring Twitter, as CEO Jack Dorsey said that he’s done talking about reports of possible acquisitions.

That’s NYSE…

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Chinese company ZTO Express made its big Wall Street debut today but failed to dazzle the Street. Unlike the Chinese IPO darling of 2014, Alibaba, ZTO dished out over 72 million shares for $19.50 a pop, only to open today for the first time on the New York Stock Exchange at $18.40. The stock later slid even lower to $17.70. But considering that the company’s original range fell between $16.50  – $18.50, its slide isn’t exactly tragic. Just disappointing. In any case, ZTO still managed to raise $1.4 billion and the company plans to use $720 million of that to purchase more trucks, land, facilities and equipment. In other words, big expansion plans are in the works. As a package delivery company, it handled close to 21 billion parcels just in 2015. It should come as no surprise, however, that ZTO’s main business deals with delivering shipments for Alibaba. In fact, Alibaba accounted for 75% of ZTO’s business in the first half of the year.  You might be wondering why Chinese companies like to list on stock exchanges in the United States. Well, for one, there are currently about 800 companies lined up in China who have filed applications to list on indexes on the country’s indexes.  It’s a considerably slower process and some feel it’s less reliable. Besides, given the volatility of the Chinese economy, raising money in U.S. dollars as opposed to a weaker Chinese currency only sweetens the pot for plenty of companies.

Add the Military to Wells Fargo’s List of Haters; Tesla’s Not Down With Discounts; Beverage CEO’s Earnings Lose Fizz

And the list of offenses just keeps growing…

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As Wells Fargo CEO John Stumpf continued to get a much-deserved beating by Congress today, the bank now finds itself staring down the wrong end of a Justice Department sanction. The reason? It seems Wells Fargo improperly repossessed cars owned by…wait for it…members of the military. That’s right. Wells Fargo was screwing over the very folks who defend this country.  Is your stomach done churning yet?  The bank apparently violated the Service-members Civil Relief Act and both Federal prosecutors and the Office of the Comptroller of the Currency have big plans for the bank that have nothing to do with stock options and hefty bonuses. It’s borderline-disturnbing that Wells Fargo proudly proclaims on its website that it has “a history of making banking easier for our servicemen and servicewomen.” If found guilty, Wells Fargo could end up forking over an estimated $20 million in penalties. That would be in addition to the $185 million that Wells Fargo was fined for opening up those two million fraudulent accounts.  Sadly, Wells Fargo isn’t even the first bank to repossess vehicles from service people who were delinquent on their loans. Banco Santander had to pony up $9 million last year for similar actions.

Blame it on Reddit…

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Looks like the discount days are over at Tesla where CEO Elon Musk sent out an email to his employees telling them to stop the practice. Apparently, Tesla has a “no negotiation no discount policy” that was in effect since day one, ten years ago when consumers could first start purchasing the battery-operated vehicles. Musk isn’t even into discounts for employees – which I think is a bit unfair. Just saying. No discounts even when the average vehicle discount in the U.S. is just under $4,000. Of course, discounts can still be applied to floor-model vehicles, test-drive vehicles and vehicles that were damaged during delivery. But for brand-spankin’ new Model S cars, which sell – or should anyway – for about $100,000, don’t even bother calculating their costs other than what the sticker price says. This whole hoopla came about because someone on Reddit posted a question about discounts for Tesla vehicles. The responses to the question did not sit well with Musk, or with analyst Brad Erickson of Pacific Crest Securities. In a research note, Erickson suggested that Tesla was getting loose with discounts in an effort to sell more cars for its third quarter – of which 22,000 were delivered. That figure, by the way, is a 90% increase over last year at this time.  But considering that Tesla has posted an operating loss for 14 consecutive quarters, I suppose there some logic at hand.

Fizzy logic…

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Nick Caporella, the CEO behind the fan favorite drink LaCroix, probably isn’t felling too bubbly right about now. Glaucus Research Group just released a very unflattering report about the Florida-based company, basically accusing it of cooking the books. The report also says Caporella used false invoices and other forms of creative accounting to inflate earnings when they weren’t quite where he wanted them to be. In all fairness, Glaucus has a short interest in the company, in the form of 2.26 million shares.  If National Beverage’s stock falls, Glaucus stands to gain a sizable chunk of cash. And that’s exactly what happened as National Beverage’s stock took an 8% hit today despite calling the report “false and defamatory.” It seems some of Glaucus’ research came from a failed 2012 lawsuit from a former associate.  In any case, shares of National Beverage were up 58% in the last twelve months  – that is, up until its recent drop. Interestingly, the soft drinks National beverages sells, including Faygo and Rip It energy drinks, sell for 40% less than Pepsico’s offerings, yet both companies have the same reported operating margin. Weird, right?  Another unusual tidbit is that despite National Beverages major increases in profit and revenue, its advertising and shipping costs remained flat, according to Glaucus’ report at least. Last month the company reported first quarter earnings where revenue was up 17% to $217 million and profit was up 69% to $29 million. Not bad for a company that basically sells fizzy flavored water and Shasta – remember that one? In the meantime the SEC is staying mum on the subject and the stock closed at $42.67.