Sweet Beat for Mondelez; Coca Cola’s Earnings Still Have Some Fizz Left; Twitter Needs a Growth Spurt

Ore-oh well…

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Last time Mondelez came up on this blog, it was because it made a $26 billion offer to buy Hershey Co. That deal would have created the biggest confection company. Ever. Except that Hershey Co. rejected the offer. In any case, the company still managed to beat estimates, cranking out earnings with a few ups and downs. Ultimately, Mondelez pulled down a profit of $464 million with 29 cents added per share. Unfortunately, the company also reported that sales fell a whopping 18% to just $6.3 billion. Some of those falling sales are being blamed on the strong U.S. dollar and that’s especially troublesome for Mondelez since most of its revenue is generated outside of the U.S. If you recall, Mondelez makes some of our country’s most beloved snacks including Oreos, Ritz Crackers and Trident gum. But Mondelez really would have liked to add Hershey Co. to its collection since 90% of Hershey’s revenue comes from the U.S. and the deal would have significantly increased Mondelez’s much-needed U.S. exposure. Instead, Mondelez CEO Irene Rosenfeld is going to attempt to trim $3 billion in expenses. The company also plans to bring its Milka brand of chocolate to China, a market where Hershey has struggled to make a dent and, in fact, lost money on the endeavor.

Fizzle out…

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Speaking of things sweet and highly caloric, Coca Cola also reported earnings with lower than expected quarterly revenue. This time China and Latin America are the culprits. Well, partly anyway. Apparently, consumer tastes in China are switching gears from soda to more healthful choices, especially premium water. And who doesn’t like their water premium, right? Latin America is making problems for Coca Cola all because of high levels of inflation in some regions there. On the bright side, revenue in North America picked up by 2%. Too bad that’s about the only place it picked up. And it’s not just Coca Cola that’s feeling the health burn. PepsiCo is also struggling to get consumers to re-embrace it’s fizzier offerings. Coca Cola’s net income came in at $3.45 billion, up 11% from last year’s $3.12 billion.  The beverage company took in $11.5 billion in revenue with 60 cents added per share. Analysts expected $11.6 billion in revenue but 58 cents per share. However, last year at this time, Coca Cola raked in $12.16 billion, a bummer no matter how you slice it. But Coca Cola’s CEO Muhtar Kent isn’t worried and feels that his beloved soda drinkers are still out there. They’re just not drinking as much as he would like them too. The fact is, the total volume of soda consumption in the U.S. declined by 1.5% in 2015, and by .9% in 2014. Which means Mr. Kent better figure out a way to get more soda drinkers or get his current ones to kick back some more.

Grow-tesque…

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On the heels of yet another celeb controversy on its site, this time over the cyber-abuse of Ghostbusters actress, Leslie Jones, Twitter announced its latest earnings.  And no, the results did not help lift the waning spirits of investors. Apparently CEO and Co-Founder Jack Dorsey has yet to pull the rabbit out of the hat as growth was so slow it was practically backwards at a paltry 1%. Revenue came in at $602 million, which was just 20% higher than last year at this time. At least shares picked 13 cents a pop, even though analysts predicted shares would only gain a dime. Expectations, however, were for $608 million in revenue, so nobody was particularly impressed by the three cent beat. Not shockingly, the stock took a nasty fall on the news, diving as much as 14% at one point during the day, and losing as much as $1.7 billion of its market value. That leaves its current market value at $11 billion, despite its $18 billion valuation. But we’re supposed to get excited for Twitter because its got some big plans for video that its hoping will actually reverse its negative fiscal tide. Videos are Twitter’s number one ad format and so it made deals with the NFL, NBA, NHL and MLB. Of course deals with the DNC and RNC are also in place since U.S. politics has turned into a veritable sporting event. But even with all that entertainment on the platform, it’s not crazy to hope for a miracle for the one-time Wall Street darling.

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Google’s Tax Troubles Continue in Madrid; Will Oreo Scoop Up Hershey?; Pier 1 Not Feeling the Outdoor Love

Mucho dinero…

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Image courtesy of Sira Anamwong/FreeDigitalPhotos.net

It was just another day in the life of Google as authorities raided its offices, this time in Madrid, Spain. At issue, yet again, is the search engine giant’s corporate tax practices in Europe and the looming question as to whether or not Google, and other big corporations like it, are steering their profits legitimately, in order to score a reduced tax rate. Spanish authorities are investigating the search engine giant to see if it has been in engaging in the  dark art we know as tax evasion. Back in May, France investigated Google for “aggravated financial fraud” and “organized money laundering” which both sound awfully sinister. France is hoping to get $1 billion from its investigation. Even Italy’s authorities are in on the action and looking to see if Google underpaid its taxes there as well.  Google already forked over $175 million in back taxes to British authorities, whose politicians are still whining because they feel that the amount was too low. Expect more post-Brexit griping. Naturally, Google and its peers are calling out their innocence and are adamant that they comply fully with tax rules. But, at any rate, the investigations still seem far from over.

Yummm…

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The mood is sweet on Wall Street with talk of a Hershey takeover from Oreo maker Mondelez International. Given that there’s a trend to cut back on the amount of sugar people have been consuming, the timing seemed opportune for a buyout of a company that makes the world’s most beloved -in my opinion, anyway – chocolate bar. Mondelez, which also makes Cadbury chocolates, is currently the second largest confection manufacturer in the world. If the buyout goes its way, it will become the number one sweets maker, as 90% of Hershey’s revenue comes from North America. Shares of Hershey shot up 22% on the tasty news, hitting a record high of $117.79. Shares of Mondelez also went up, just not as much. Hershey’s market value is about $21 billion, give or take. But in order for the buyout to go forward, the Hershey Trust would have to give its blessing. After all, it controls 81% of Hershey stock and voting rights. However if you’re looking for some hostile action, might I suggest you look elsewhere. Mondelez already pledged to not shed any jobs and to keep the illustrious Hershey name intact.

Missed it…

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It’s looking like a long walk off a short Pier 1 as revenue for the home store chain came in at a disappointing $418.4 million. That number might seem impressive, except that it wasn’t to analysts, who were expecting revenue closer to $420 million. The company lost $6 million in profits and 7 cents a share when predictions were for a 5 cent per share loss. If those figures weren’t depressing enough, then consider that last year at this time, Pier 1 took in revenue of $436.9 million with a $7 million profit and an 8 cents per share gain. Shares of the company are now 50% less than what they were a year ago. The big area to disappoint was outdoor furniture. Darn you, outdoor furniture. That category was supposed to bring in some boffo results, but instead proved to be a real downer. The table top category did nicely. Just not nice enough. Taking a page from Chipotle, the company will now attempt to march out a rewards program and even add a gift registry. Which is weird, because I assumed the company already had a gift registry. I even went to check just now and wouldn’t you know it? It doesn’t. In any case, the company is forging ahead with plans to close 20 stores, while it already shuttered 8 this past quarter. Pier 1 did, however, open another three stores, presumably in more economically hospitable areas.

Ali-blah-blah Earnings; Hershey’s Beefing Up; No Stopping Facebook

Who would have thunk it?

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Powerhouse stock Alibaba, with its record-breaking $25 billion IPO, took a nasty beating today as it announced earnings that were less than impressive. Revenue did rise for the e-commerce giant, but not as much as expected, indicating growth slowed. In numbers that were nothing short of disappointing, revenue came in at $4.22 billion when estimates called for $4.45 billion.  Its stock took an unwelcome drop to under $90 today – a major blow to a stock that had seen a high of $120 fairly recently and gets way more commerce action than both Amazon and eBay combined. Then there’s the Chinese government, who despite being fairly chummy (as rumor has it) with Alibaba, has been coming down hard on CEO Jack Ma and Co. for not doing their part, on behalf of consumer protection, to crack down on counterfeiters and false advertising. Government officials are even accusing Alibaba employees of taking bribes from some shifty merchants.  With 50,000 merchants signed up with Alibaba, there are bound to be some bad eggs in there. In the meantime, Yahoo has decided to spin off its remaining Alibaba shares into a separate, publicly traded independent registered investment company aptly named…are you ready for this one? SpinCo.

Would you like some filet mignon with that chocolate bar?

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Image courtesy of Arvind Balaraman/FreeDigitalPhotos.net

Hershey, as in my most favorite chocolate, that also happens to be my most favorite delectable migraine inducer, is adding some high-protein snack power to its confection arsenal. Krave Pure Foods, founded in 2009 by Jonathan Sebastiani, will now join Twizzlers and Almond Joy, among other brands, assuming its place in the Hershey family. Krave will be bringing with it a whole lotta beef jerky. No joke. Snack tastes are indeed shifting, my virtual friends. Those snacking tastes are shifting towards meatier, protein-infused foods and are proving to be quite a profitable industry – one that is growing at a double digit pace. Fiscal rumors have it that Krave pulled in $35 million in sales this past year. Other fiscal rumors report that Hershey paid between $200 – $300 million for Krave. So what better way for Hershey to boost its sagging sales then adding some new beefier selections that Krave just happens to offer up. Hershey net sales did go up by 2.7%, which is good. Just not good enough. Analysts expected $2.01 billion in sales, but Hershey only managed to come in at $2.01 billion. Happy snacking!

It just keeps getting better and better and…

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Image courtesy of FrameAngel/FreeDigitalPhotos.net

Social media giant Facebook had yet another stellar quarter, once again pummeling expectations. Some of that fourth quarter magic is due in large part because of Facebook’s focus shift into the mobile arena, and all the ad revenue its racking up there. In fact, 2/3 of the social media company’s ad revenue came from the wonderful world of ads sending revenue up 53% to $3.59 billion. And who doesn’t like revenue numbers like that? Facebook pulled in $701 million in profit and $0.25 a share when last year it pulled in $523 million and $0.20 per share – and yes, that was a good quarter last year too. The company even gained 13% more monthly active users and now stands at 1.4 billion people who soak up the joys of Facebook.

President Obama Tells CEO’s How to Invest (it’s true); Tesla Electrified Owners; Hershey Welcomes Back Sugar

 Oh and by the way…

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Image courtesy of cooldesign/FreeDigitalPhotos.net

As I mentioned yesterday, the Business Roundatble got together to dish out its thoughts and projections for the economy. If you recall, the BRT is a group of CEO’s “of leading U.S. companies working to promote sound public policy and a thriving U.S. economy.” I’m down with that. Not to be outdone, President Obama, who is not a CEO, told the BRT group, who by the way, represent around $7.4 trillion in annual revenue, that they should invest in infrastructure which apparently is a fabulous “foundation for growth.” It should be duly noted that this business advice is coming from the same person who is responsible for the very unaffordable Affordable Healthcare Care Act. Just saying. President Obama also went on to say that the thorn in his executive side, the bane of his Presidential existence, also known as Republicans, would be sure to challenge any source of funding if it meant new taxes. And just when I was looking forward to paying more taxes together with my unaffordable health care, darn it! Hence, according to Mr. President, you needn’t hold your breath for any new infrastructure bill to pass. And while private investment in infrastructure is no new concept, especially in other countries, here in the United States, legal and tax issues don’t exactly scream, “Invest in infrastructure!”

Zap to it…

Image courtesy of Danilo Rizzuti/FreeDigitalPhotos.net

Image courtesy of Danilo Rizzuti/FreeDigitalPhotos.net

Can Tesla do no wrong? Well it can but apparently not when it comes to Consumer Reports, which just reported that the Tesla Model S is so beloved amongst its owners that 98% of them would repurchase the vehicle (But what of the other 2%?). The car which goes for close to $70,000 is even a fave with the team over at Consumer Reports. Other cars that owners loved were the Chevrolet Corvette Stingray and the Subaru Forester. Apples and oranges, I know. The Kia Rio, sad to say (actually ambivalent) failed to impress its owners. However, it was the Nissan Versa that found itself at the bottom of the list. And while life is good at the top for Tesla, it best be warned: BMW is nipping at its shiny bumper. Especially with its i3.  While Tesla’s superchargers across the country (and beyond) can be used only with Teslas, BMW is about to put out its own series of superchargers that will be compatible with other models. Except for Teslas. And Nissans (especially that Versa).

I know this sounds corny but…

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Image courtesy of artur84/FreeDigitalPhotos.net

High-fructose corn syrup beware! You’re on the chopping block having gotten a bad rep over the last several years by getting blamed for a rise in obesity and diabetes. While there isn’t enough evidence that corn-syrup is exclusively to blame,  The Hershey Co. has still decided to kick that ingredient out of its delectable confections.  Instead it will once again use perennial favorite , and old time classic, sugar, instead of the high-fructose corn syrup/sugar cocktail it had been using for so many years. Sugar, that formidable staple which holds a prominent place in my own personal food pyramid, will once again reign supreme for Hershey confections.  However, there is no official time-frame for the switch –  only an acknowledgement that consumers, my self included, much prefer sugar over high-fructose corn syrup.  One of the many groups not pleased by this turn of events are those involved in corn futures. Refiners have even cut costs just to compete with sugar. But seriously, can you really compete with…sugar?

The Bitter End Might Have Just Arrived For Valeant Pharmaceuticals; Cocoa: Get it While You Still Can; It Seems Japan Is Not As Far As It Seems

Has their time finally come to an end?

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Image courtesy of patpitchaya/FreeDigitalPhotos.net

Could it be that the Valeant/Allergan saga has finally come to an anti-climactic end? Just when things seemed to be getting juicy, in walks generic drug-maker Actavis with an offer of $219 per share, making Valeant’s impending hostile takeover nothing more than a bad memory for Allergan. If you recall, everyone’s favorite (and only) Botox-maker had been fighting off Valeant’s fiscal hostilities for months. And in one fell money-minded swoop, Actavis put in an offer for Allergan that not only values it at about $66 billion, but also makes it so that it doesn’t have to deal with Bill Ackman and his Pershing Square Capital Management, which by the way, has almost a 9.7% stake in Allergan. Neither Pershing Square nor Valeant had any comment on the new offer and why would they. Besides, they win either way. This new deal adds quite a few billion dollars to Pershing Square’s already plump portfolio. As for Valeant, well it has already begun to set its fiscal sights on animal care company Zoetis.

Start hoarding the Hersheys…

Image Courtesy of Danilo Rizzuti/FreeDigitalPhotos.net

Image Courtesy of Danilo Rizzuti/FreeDigitalPhotos.net

It just might be that the world really is coming to an end. If a recent report by Bloomberg is correct (and seriously, it’s Bloomberg so I am sure it is), then the world will be in the throes of a chocolate shortage, with demand outpacing supply in the year 2020 by one million metric tons. If that’s not considered armageddon, then I don’t what is. Some of the factors to blame: Ebola. Yes that obnoxious, noxious deadly virus has given us ample reasons to hate it and here’s yet one more. West Africa supplies us with almost 75% of the world’s cocoa. The fact that the countries afflicted with Ebola are so close to the countries that supply cocoa are basically freaking people out on so many levels. Of course drought always manages to play a menacing role in crops and cocoa is no different. In fact the price of cocoa, whether you realized it or not (or simply just tried to feign ignorance) has gone up 60% since 2012. Combine that with pests and other plant diseases and that Hershey bar with almonds is becoming but a distant memory. So start stockpiling those candy bars. In a few years you might just be able to pay your mortgage with them.

So what’s the big deal?

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Image courtesy of ddpavumba/FreeDigitalPhotos.net

Japan is staring into the wrong end of a recession after reporting its second straight quarter of growth contraction. Never a good thing especially when we’re talking about the world’s second largest economy. So why should we, on this side of the planet, care? Well for one, its toying with our financial markets. Our markets don’t particularly like it when other markets in other parts of the world have fiscal issues and Japan’s are quite large. Then we must take into account that our European friends across the pond aren’t too thrilled, as are we,  with state of their financial markets, which have seem to have come to a slowdown/standstill. When that happens, the United States ends up having to support more than its fair share of the global economy which, naturally extends on over to us, the taxpayers. See how that all works out so unpleasantly?