French Company Goes Organic for U.S. Acquisition; U.S. Airlines Gear Up for Cuba; U.S. Banks Bond Over Brexit

Let them eat organic cake!

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Dannon Yogurt’s parent company, Danone (said with a French accent) is looking to pick up  a major U.S company that will effectively double its size. That’s assuming all goes according to plan. Danone wants to offer organic food provider, WhiteWave, purveyor of favorites like Silk Almond and Soy Milk, Horizon Milk and Earthbound Farms, $10.4 billion in cash for the fiscal pleasure of its company. That’s a 24% premium over WhiteWave’s thirty day average closing price and comes out to about to $56.25 per share. But for Danone, whose looking to make itself a bigger presence in the United States, it’s well worth it, since WhiteWave’s offerings tend to attract wealthier consumers. WhiteWave generates annual sales of about $4 billion and with this acquisition, Danone expects to see a $300 million boost in operating profit. Danone has also been struggling in other parts of the world and this acquisition would ease the burden of some of those lesser-performing markets. FYI, when companies offer to buy other companies, their offers tend be at least at a 30% premium. Because this offer was not, it theoretically means that the bidding door is still open to other offers from companies like Coca Cola, PepsiCo and Kellogg Co, to name but a few. In a regulatory filing, though, WhiteWave did graciously say that it wouldn’t solicit other offers. However, there are exceptions. Should WhiteWave go with another offer, Danone still wins because it will get a $310 million break-up fee.

Bienvenido…

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Image courtesy of Tuomas_Lehtinen/FreeDigitalPhotos.net

Believe it or not, Hillary Clinton wasn’t the only topic of conversation today coming out of Washington DC. President Obama announced a proposal to allow eight U.S. airlines to provide nonstop service between Cuba and ten U.S. cities, beginning this fall. This will mark the first time in 50 years that travel of this kind will be available. And all this just one year after diplomatic relations were re-established. The city and airline selections were made by the Department of Transportation and the lucky airline winners are: Alaska Airlines, American Airlines, Delta Airlines, Frontier Airlines, JetBlue Airways, Southwest Airlines, Spirit Airlines and United Airlines. American Airlines is actually no stranger to the island nation, as it has been offering charter services there since 1991. Just last year the airline made over one thousand chartered flights to Cuba, while JetBlue made over 200 chartered trips. That’s awfully welcome news for an industry that took a fiscal beating lately. The cities that can look forward to the new service had to have have substantial Cuban-American populations already in place. Hence, Florida finds itself the recipient of 14 out of the 20 daily nonstop flights, since it boasts the largest Cuban-American population. The cities include: Atlanta, Charlotte, Fort Lauderdale, Houston, Los Angeles, Miami,  Newark, New York City, Orlando and Tampa. According to Cuban officials, the number of American travelers to Cuba is up 84%, compared to last year, in just the first half of the year.  But there is still a trade embargo in place, which does include a travel ban. However, there are twelve convenient categories of reasons to fly to Cuba that you can check off should you decide to make your way to Havana any time soon.

Come together…

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It’s a fiscal kumbaya as four U.S. banks offered up their sincerest support for London following the Brexit vote. The gracious supporters include, JPMorgan, Goldman Sachs, Bank of America Merrill Lynch and Morgan Stanley. The banks agreed to help British Finance Minister George Osborne find ways to ensure that the U.K. remains the prominent financial player that it always was, pre-Brexit. And of course they all will try and find new and exciting ways to lure and retain big banking to London so that the consequences of the Brexit don’t do the country in completely. While that sentiment no doubt warmed the hearts of investors all over the world, the investment banks could not offer up as much optimism as far as the jobs situation is concerned. After all, “no one in their right mind would currently invest in Britain.” Keeping those jobs there might might be the biggest challenge of all and no one wants to make any promises on that. Especially Jamie Dimon, who had previously mentioned that around 4,000 jobs could make their way out of London. In the meantime, the French wasted no time – I mean NONE! – in announcing to the world that it would make its tax regime as enticing as possible, in a not at all subtle attempt to grab some pricey banking business from London.

Economy Cools on Coal; Saving Chipotle One Burrito at a Time; Morgan Stanley Made a Mistake and Admits It!

Hot or coal?

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Image courtesy of SOMMAI/FreeDigitalPhotos.net

Feel free to play it naughty this year as Santa may not be able to scrounge up some coal to put in your stocking anyway. That’s because Peabody Energy, the largest American coal miner, might just be going bust, joining a slew of other coal companies. The company announced that it will be delaying a $71 million interest payment that’s due this week – and that, my friends, often signals that a company could be on the brink of filing for Chapter 11 bankruptcy protection. Not that this would come as any great surprise since the stock lost over 95% of its value in the last twelve months and today tanked over 40%. Two years ago the company’s stock hit a high of $299.10. Now it’s barely hanging on as it closed at $2.20 today. The fact is that the global economy is slow enough to wreak havoc on major industries, in this case, coal. Only 33% of power came from coal in 2015. The coal industry has had to contend with stricter environmental standards that have put a major crimp in production. With natural gas being used more and more, seeing as how its cheaper and less polluting, several other coal companies have already gone under. And while nobody is crying over less pollution, it does mean that thousands of people will be out of jobs. Tens of thousands. As for Peabody Energy, the company has thirty days to make that $71 million or face default.

Burritos for all….

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Image courtesy of SOMMAI/FreeDigitalPhotos.net

It appears all is not lost at Chipotle as the food joint managed to recoup about 30% of its sales with the help of some free food – burritos, in fact. There is a lot of irony at work here. According to Chipotle CFO Jack Hartung, “Free burritos—turns out it works. It brings people into the restaurants.” It’s a good thing something is bringing folks back into the restaurants after that ugly E.Coli outbreak that sent millions of customers scrambling as far away from the restaurants as possible. As part of the company’s turnaround plan, Chipotle sent out coupons for free burritos to about 7 million customers. Then it decided that maybe sending out 21 million more coupons might not be such a bad idea. It wasn’t since 5.3 million customers already downloaded the first coupon and then, 2.5 million actually walked into a Chipotle, picked up their free burrito and, presumably, purchased a couple of other items off the menu as well. Hey, once you get ’em in the door…In any case, this quarter marked the first time that Chipotle actually forecasted a quarterly loss. Ever. Naturally, the company is still reeling from the losses over the outbreak. However, it’s also expecting to incur some heavy expenses for marketing and, of course, free burritos.

Um, about that price target…

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Wall Street insiders made a mistake and they are actually admitting it. Analysts at Morgan Stanley used to just love LinkedIn and thought the world of the platform. But that love has waned and thus the brokerage has downgraded the stock, savagely slashing the price target from $190 to $125. After all, LinkedIn’s earnings didn’t impress. Far from it, in fact, and the stock has gone down a whopping 54% in just the last three months. Morgan Stanley analyst Brian Nowak eloquently said of LinkedIn, “With its current product offering, LinkedIn isn’t likely to be as big of a platform as we previously thought.” That was harsh, I tell you. And just like that, shares of the company went down on all because the brokerages had a fiscal change of heart.

Things are Getting a Little Seated at Yahoo!; IRS Has Close to $1 Billion Up for Grabs; Wall Street’s Crazy ‘Bout a Sharp-Dressed Man

Board to tears……

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Image courtesy of Surachai/FreeDigitalPhotos.net

Yahoo added two directors to its board, bringing the grand total to nine seats, all in the hopes of making things that much more difficult to deflect attacks from hedge fund Starboard Value. Starboard Value has not been shy about expressing its disapproval over the way CEO Marissa Mayer has been handling matters at the tech giant. Starboard is on a mission to make an attack and win seats on the board so it can run the company in its own special way. The new folks coming to fill those seats are former Morgan Stanley executive Catherine Friedman and former Broadcom Corp CEO Eric Brandt. The seats originally belonged to tech entrepreneur Max Levchin and Charles Schwab. Yes, that Charles Schwab. But both vacated their seats amidst all the squabbling at Yahoo over how to run the company without losing tons of cash in the process. Board re-election comes later in the year but nominations are due this month and the process should be a fun little corporate spectacle as Yahoo has been under some fierce pressure to sell off its core web assets, including Yahoo Sports and Yahoo Mail. Among the potential suitors who are rumored to be interested in picking up those core assets are Verizon and Time, And now, instead of looking to grow the company, Marissa Mayer has switched courses and would be really happy to just execute a $400 million cost-cutting plan. That’s in addition to shareholder pressure of trying to spinoff of the company’s sizable share in Alibaba, without actually having to pay any taxes on the deal. That effort should be entertaining in and of itself.

In it to claim it…

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Image courtesy of Surachai/FreeDigitalPhotos.net

The IRS is sitting on close to $1 billion in outstanding refunds from 2012. The question is, can you claim any of it? Well there are an estimated one million taxpayers who qualify for a piece of that pie since they apparently failed to file their 2012 IRS tax return. Taxpayers get a three-year window to file a claim based on the return due date which this year happens to be April 18, 2016. All you’ll need to do is fill out the 2012 1040 form and collect the w-2, 1098, 1099 or 5498 from that same year. Just check out the IRS website if you don’t believe me. But filer be warned: If you didn’t bother filing your 2013 and 2014 return, then don’t bother collecting your refund just yet as it may just get withheld. The IRS, however, wants you to claim your refund, otherwise all that cash goes into the hands of the U.S. Treasury. IRS Commissioner John Koskinen said, “We especially encourage students and others who didn’t earn much money to look into this situation because they may still be entitled to a refund.”And I guess the IRS just isn’t that into the treasury if they are so eager for you to claim that money. Texas and California are the states with the most unclaimed refunds. And the average refund that could be collected clocks in at $718. So what are you waiting for?

A little less dapper…

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Tailored Brands, a.k.a. the company that owns Men’s Wearhouse and Jos A. Bank, finally experienced some Wall Street lovin’ as the stock jumped more than 11% today. The company hasn’t had a jump like this in two years and it’s all because the company announced that it would be closing about 250 of its stores this year out of over 700 that are dotted all over the country. It’s not that Wall Street didn’t care for the company’s merchandise, it’s that Wall Street didn’t like that consumers weren’t buying enough of it and the company was bleeding money. The company’s revenue took a nasty beating after brass decided to chuck Jos A. Bank’s “Buy One Get Three free” promotion back in October. This move apparently upset consumers who shopped at the chain for just that reason. Executives felt, however, that the promo cheapened the line, especially when the promo ended up in an “SNL” skit where the apparel was called “effectively cheaper than paper towels.” Ouch. Cheap or not, customers let the company know how they felt by sending sales down 32%, while Men’s Wearhouse managed to take in a 4.3% gain. The stock lost 30 cents a share in its fourth quarter, which was miraculously not as bad as the 37 cents analyst predicted the stock would lose.

Mega Media Merger; Fitbit is Overweight…And That’s a Good Thing; Some Foam for Thought

Urge to merge…

Image courtesy of Sira Anamwong/FreeDigitalPhotos.net

Image courtesy of Sira Anamwong/FreeDigitalPhotos.net

While you were busy navigating mall parking lots trying to find a parking space so you could do some meaningful Labor Day shopping, Media General was also busy doing some shopping of its own. The media company picked up, or merged – as it’s being called – with Meredith Media to the tune of $2.4 billion. The new company to be borne out of this merger will be called Meredith Media General – how convenient – and will take its place as the third largest television station operator in the U.S. Media General is gaining an additional 17 television stations, bringing its grand total to 88. Meredith also brings with it some great poolside reading, including Better Homes and Gardens, Shape and Parents magazine – the ultimate publication that lets parents know they are doing everything wrong. The deal was done for $51.53 per share, a generous 12% premium from Meredith’s Friday closing price of $45.94. While the boards of both companies approved the deal, the FCC must also gives its blessing for this union, which is estimated to rake in $3 billion in annual revenue. And here’s a little fun fact: Meredith Media began in 1902 as an agricultural publisher. Who knew?

Fit to be upgraded…

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Image courtesy of iosphere/FreeDigitalPhotos.net

Nothing says fit like having your stock upgraded by Morgan Stanley to overweight. Oh the irony.  Morgan Stanley had initially classified the stock as equal weight as in, it’s right where it belongs. But alas! Morgan Stanley has been noticing how Fitbit has been performing really nicely lately, fiscally speaking of course, and expects the maker of the wearable device to outperform aka overweight. That is a finance term, I kid you not, which also can mean (and does in this instance) outperform. And who does’t love a stock that is overweight and outperforms? Hence, the stock rallied today. In fact, Fitbit had its biggest jump today since June, when it debuted at a relatively modest $20 per share. Second quarter revenue tripled from a year earlier to over $400 million, compelling Morgan Stanley to revise Fitbit’s target price from a paltry $43 per share to a handsome $58 per share. And it’s no wonder since Fitbit has a staggering 21% piece of a a $10 billion industry. As for that little company we call Apple, it appears that wondrous watch they peddle isn’t swaying those Fitbit wearers, many of whom have decided against purchasing that ever wondrous piece of technology. Fitbit’s stock price, btw, hit $34.77 and closed today at $35.49.

An ice cold one…

Image courtesy of Getideaka/FreeDigitalPhotos.net

Image courtesy of Getideaka/FreeDigitalPhotos.net

Because it’s the thing to do, Heineken is adding to its stash of beer selections by welcoming craft brewery Lagunitas Brewery to its foamy fold. Apparently craft beer is the new black and has been growing at a steady clip compared to its less craftier counterparts, whose growth rate has slowed considerably. In fact, one out of every ten beers is a craft beer. Clearly it’s all the rage. Lagunitas’ beverages, most notable for its India Pale Ale, are reputed to be so tasty, that the company shipped out 600,000 barrels just in 2014. Unfortunately, now with Heineken taking a 50% stake in Lagunitas, the California-based beer company no longer gets to sport the craft brewer status. In order to be classified in that illustrious category, a company must be less than 25% owned or controlled by a larger brewer. Oh well. But at least with Heineken buying it, Lagunitas gets to spread its foamy wings and bring its tasty ales to other parts of the world that have yet to experience the joy that is…Lagunitas.

Greek Banks Open for Business Again. Sort of.; Avengers: Age of Ultron Beats the Street; Morgan Stanley Profit Beat

Bank on it…

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Image courtesy of patpitchaya/FreeDigitalPhotos.net

After one long, fiscally painful week where Greek Prime Minister Alexis Tsipras begrudgingly agreed to terms for a bailout with Greece’s creditors, the country’s banks are finally back up and running. It only took three weeks to get to this point. But at least now both the IMF and ECB can look forward to getting some of their money back and Greece gets to stay in the euro. It’s a win-win. Sort of. And while here in the states, running to the bank can be nothing short of a tedious errand, in Greece, that one act is now reason enough to celebrate. Of course with the sales taxes in Greece increasing so dramatically  – from 13% to 23% –  celebrating such an event might become prohibitively expensive. But like I said, at least Greece gets to stay in the euro. As these austerity measures take effect, Greeks will now be able to make deposits, access their safety deposit boxes and above all else, make withdrawals. Only now, they aren’t limited to daily withdrawals of $65 per day anymore. Instead, Greeks can actually withdraw a whopping max of 420 euros ($455 bucks)  a week. As for transfers abroad…those are gonna have to wait.

Dinosaurs, Avengers and Star Wars – oh my!

Image courtesy of  Dr Joseph Valks/FreeDigitalPhotos.net

Image courtesy of Dr Joseph Valks/FreeDigitalPhotos.net

It’s been a super-hero kind of a quarter for Hasbro whose earnings had a major boost from Avengers: Age of Ultron, Jurassic World and perennial classic, Star Wars. The toy company actually posted a smaller than expected decline. Yes, you read that right. But what’s really weird – in a good way – is that the toys typically favored by boys were the big winners/earners this quarter. Usually, its the female driven categories that hog the earnings glory. Only this time, that category that includes Nerf Rebelle and My Little Pony took a 22% hit in net revenue. But, the company’s revenue didn’t go down as much as analysts thought it would. And that’s why everyone seems to be so stoked about the $779 million in revenue Hasbro did bank. That’s a welcome difference from the estimated $773 million Hasbro was expected to take in. And because it’s the cool fiscal thing to do these days, the strong dollar/foreign exchange rates took some flack for the drop in the toy company’s revenue. Otherwise, profit was a cool $41 million adding 33 cents per share when Wall Street only expected a paltry 29 cents per share.

They got the beat…

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Morgan Stanley’s profit fell by 8.5% over last year’s results. But no one’s too upset. I mean, don’t get me wrong. Nobody’s whipping out the champagne (that I know of) but the bank still managed to score some impressive gains in all three of its main businesses so hope isn’t exactly lost. With a little help from brokerage fees and increased trading, Morgan Stanley banked a $1.8 billion profit adding 79 cents per share – after a tax benefit. Analysts only expected the bank to earn 74 cents per share. However, not be a downer but last year at this time the company scored a profit of $1.9 billion with 92 cents per share. However,  Morgan Stanley does get bragging rights – for this quarter anyway – as it had the biggest revenue increase out of all six major U.S. banks,  pulling down a whopping $9.7 billion. Last year at this time that figure was closer to $8.6 billion.The question is, can they keep pulling that trick off?

Colt Arms Itself With Chapter 11 Protection; Target Teams Up With CVS; Another One Bites the Sawdust as Lumber Liquidator CMO Ousted

Out with a bang?

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Image courtesy of vectorolie/FreeDigitalPhotos.net

The maker of everybody’s favorite M16 rifle, gunmaker Colt Defense, has filed for bankruptcy. Famous for perennial firepower darlings, the Colt .45 and the “Peacemaker” – aka the gun that won the West – Colt saw delays in orders from both the US and foreign militaries, not to mention less demand for the company’s sport rifles, that caused its numbers to go into the red. Filing for chapter 11 in Wilmington, Delaware, the arms company already hit up Morgan Stanley for a $70 million loan, back in November, just to make an interest payment. Colt currently has about $500 million in assets and Chief Restructuring Officer Keith Maib wants to assure the public that “Colt remains open for business” while it attempts to figure out how to redo its balance sheets. Incidentally, this is not the company’s first trip down bankruptcy road. Colt, which was started by Samuel Colt back in 1836, also hit the bankruptcy skids back in 1842. The company rebounded and Samuel Colt went on to become one the country’s wealthiest men.

If you can’t beat ’em, join ’em…

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Image courtesy of dream designs/FreeDigitalPhotos.net

Target’s ditching its pharmacy business in a $1.9 billion deal with CVS. The retailer came to some conclusions about the whole operation which basically had to do with money, and how much of it the pharmacy division wasn’t making. In fact, Target was actually losing money on it. Part of the problem is that the Affordable Care Act was just making everything so darn complicated and well, CVS is more equipped to handle the constantly changing landscape of healthcare while Target is best suited to sell stuff that consumers want and need but that don’t require prescriptions. So basically, Target is taking the pharmacies it already has housed in its locations and magically transforming them into CVS stores. Target expects that will bring in more traffic to its stores as CVS enthusiasts will flock to Target/CVS stores to get their prescriptions filled and then be compelled to step inside the store, filling up their red shopping carts with the kind of merchandise on which Target intends to place an increased focus to increase sales. Funny how that works, huh?

Saw it coming…

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Image courtesy of sattva/FreeDigitalPhotos.net

The latest executive to bite the Lumber Liquidators’ sawdust is Chief Merchandising Officer William Shlegel. The executive was on the job for four years before that scathing “60 Minutes” report aired back in March accusing the company of using formaldehyde-laced laminate flooring form China. Shlegel will be replaced by Chief marketing Officer Marco Pescara, who will pull double duty as he stays in his post while assuming his soon-to-be-former colleague’s role as well. No statement or comment was offered by Lumber Liquidators as to why Shlegel was shown the door, nor were there any comments about what, if any, his role was in the formaldehyde-laced flooring disaster. Of course, this latest switcheroo doesn’t even begin to solve the company’s tsunami of problems as the Justice Department is still seeking criminal charges against Lumber Liquidators, while it faces more than 100 class-action lawsuits. Sales of all the toxic flooring from China has been halted at the 360 locations. In the meantime, Lumber liquidators founder Thomas Sullivan has been playing CEO since the previous one, Robert Lynch ungraciously bowed out last month. The stock, to the surprise of…no one, has lost over 70% of its value in the last twelve months.

H&M Goes Haute on Profits; Google-gratulations; Taco Bell Gets Biscuit-y

So trendy…

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Image courtesy of sscreations/FreeDigitalPhotos.net

H&M posted some particularly impressive digits with profits up 36% to about $423 million. Of course, since it’s a Swedish company, those numbers came out to 3.61 billion kronors. I’m guessing analysts don’t do a lot of shopping at the world’s second largest retailer because they only expected 3.32 billion kronors. H&M attributes a lot of that success to some major online and store expansion activity. Whatever it was, it worked.  But here’s where things got dicey. Shares of the company fell over 3% because of one not so teeny tiny problem: Revenue for the first three weeks of March slowed to 9% from February’s 15%. This put a damper on the profit surge news. However, one analyst graciously pointed out that it was the first time in 17 months that growth even slowed to under 10%. So no one’s too concerned. It wouldn’t be right not to blame some of that on a winter that has overstayed its welcome. However, that strong dollar of ours is also going to be messing with H&M too, as it’s going to get a lot pricier to purchase goods and services to put out all those fabulously trendy and cheap clothes. Then there’s the not so minor issue that so much of its merchandise is purchased in dollars even though its sold in Euros. That might put a fiscal crimp on things, as well. Strong dollar or weak euro, H&M still has plans to open 400 stores worldwide.

Googled it…

Image courtesy of Stuart Miles/FreeDgitalPhotos.net

Image courtesy of Stuart Miles/FreeDgitalPhotos.net

Ruth Porat. Remember that name. That is, if you didn’t already, as she is regarded as one of the “most powerful women on Wall Street.” Except she’s ditching Wall Street for a new gig in Silicon Valley as Google’s new CFO. Just how big a deal is it? Well, Wall Street liked the appointment so much that Google’s stock went up almost 3% today because of it. Yeah, she’s that impressive. Ms. Porat has been at Morgan Stanley for 28 years but is no stranger to tech having worked on some major deals for both Amazon and eBay. During 2008’s nasty fiscal crisis, she advised the U.S. Department of Treasury on AIG, Freddie Mac and Fannie Mae.  She was even under consideration for the role of Deputy Treasury Secretary. Not too shabby. She’ll be replacing Patrick Pichette who said he’s retiring to spend more time with his family. So friggin’ sweet.  Ms. Porat gets to report to Google co-founder and CEO, Larry Page, who is presumably just as stoked about his new hire as Wall Street is.

Would you like that to go?

Image courtesy of Mister GC/FreeDigitalPhotos.net

Image courtesy of Mister GC/FreeDigitalPhotos.net

Is it a taco? Or is it a biscuit. Excellent question and for Taco Bell, whatever you decide probably won’t matter as long as you buy the darn thing. The fast-food chain is heating up the breakfast wars, yet again, armed with its latest weaponry – the taco biscuit, a biscuit in the shape of a taco. Got that? Last year Taco Bell took an advertising swing at McDonald’s with a campaign featuring people whose names were actually Ronald McDonald, devouring a Taco Bell breakfast and loving it. While it’s no doubt that McDonald’s did not care for this little shtick, the fact is that breakfast at the Golden Arches still accounts for 25% of McDonald’s sales when Taco Bell only sees 6% of its sales going towards the most important meal of the day (so they say).  Since traffic has been going up at fast-food establishments for the last four years, does the Taco Biscuit have what it takes to propel Taco Bell and its 6,000 U.S. establishments to hit its goal of seeing 20% of sales coming from breakfast? Time will tell, o’ fearless breakfast diner.