A Beer-y Big Merger is Brewing; Twitter’s Big Plans; Johnson & Johnson Needs a Band-Aid for its 3Q

99 million bottles of beer on the wall..

Image courtesy of Gualberto107/FreeDigitalPhotos.net

Image courtesy of Gualberto107/FreeDigitalPhotos.net

It looks like we have a winner. Well, a winning bid, anyways, that has SABMiller finally finally saying yes to ABInBev’s offer to scoop ’em up. After five tries, ABInBev offered up $106 billion for its fellow mega brewer. Now regulatory approval in the United States, and even China, is all that stands between final completion of the merger. That, and also shareholder approval which still might get in the way of meaningful fiscal relationship. Assuming the merger is approved, it will go down as one of the top five mergers. Ever. The newly formed  company will control approximately a third of all the world’s beer (Heineken, the next biggest competitor, only controls 9% of the market) and puts Corona and Budweiser in the same corporate family as Miller and Grolsch.  The new combo will handle 18 of the top 40 beers in the world. It’s a match, some would say, made in beer heaven. The two companies put out 77 billion liters of drinks and 150 billion pints last year. Once they merge, sales are expected to come in at about $55 billion. If, however, the deal does not go through, AbInBev  has to hand over a $3 billion break-up fee. to SABMiller. Is that necessarily a bad thing?

Chirp chirp…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Twitter is about to get a lot less chipper. Well, 8% less chipper, to be more precise. Just one week after re-assuming his CEO role, co-founder Jack Dorsey announced that Twitter will be trimming its workforce, eliminating 336 positions out of the 4,100 at the social media company. Those positions will be mostly from the product and engineering areas whose departments were already bloated. No lay-offs are expected of any executives. Apparently, the company is not bloated with them. Dorsey is on a mission to turn Twitter into a kindler gentler platform. Just kidding. He just wants to make the system more accessible because, believe it or not, not everybody finds Twitter that user-friendly. Who would’ve thunk it? It seems many users have signed up only to unceremoniously part ways with the micro-blogging tool shortly thereafter.  In the process, Dorsey’s also hoping to make a lot of cash and do away with those bleak stagnant quarters that the company keeps churning out. Wall Street likes Jack Dorsey’s ideas so far and sent shares up almost 6%. Too bad the stock is down 30% for the year.  Dorsey added, “The world needs a strong Twitter, and this is another step to get there.” I couldn’t have made that up if I tried.

Band-Aids and Tylenol and hep C, oh my!

Image courtesy of Mister GC/FreeDigitalPhotos.net

Image courtesy of Mister GC/FreeDigitalPhotos.net

Health care giant Johnson & Johnson has had better quarters. Especially much better than this past third quarter where the company saw a 29% drop in earnings and is now down 8% for the year. There is no band-aid big enough for that boo boo. As is the trend, the strong dollar gets part of the blame, or rather 8% of it. But at least the company is showing signs of recovery following a spate of recalls that go back to 2009, as its consumer health business posted some respectable digits. The company even plans to buy back $10 billion in common stock and increased its profit outlook by a nickel hoping to score between $6.15 – $6.20 per share for the year. Johnson & Johnson pulled in net income of $3.36 billion scoring $1.20 per share with over $17 billion in revenue. Unfortunately, analysts were looking for $17.41 billion in revenue and doesn’t even compare to last year’s net income of $4.75 billion figure that added $1.60 per share. Wall Street made sure to share its disappointment by sending shares down 71 cents a pop.  The company also took a 90% beating on its hepatitis C, Olysio, drug since newer drugs to treat that hit the market. And even though sales of Tylenol and Motrin fell worldwide by 7.7%, here in the states, sales on those products increased almost 9%. And for that you are welcome, Johnson & Johnson.

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Beer Companies Foam Up to Take Over the World; Colorado Ditch Day for Marijuana Tax; Poor Findings from U.S. Census Bureau

Sudsy…

Image courtesy of Danilin/FreeDigitalPhotos.net

Image courtesy of Danilin/FreeDigitalPhotos.net

A frothy beer merger seems to be brewing for two of the biggest beer makers in the world. Rumor has it that ABInBev and SABMiller are throwing around the idea of possibly joining foamy forces to create the biggest beer company. Ever. The move could also result in forming one of the biggest food and beverage companies. Ever. If the merger goes through, the new company would control a mind-numbing half of the entire beer market’s total profits. The new entity will also become one of the top ten biggest companies in the world, with Procter & Gamble and Nestle SA trailing behind. How a beer company’s market cap could surpass that of companies which make toothpaste and chocolate is beyond me. But I digress. ABInBev owns a lot beers you know like perennial classics, Budweiser, Corona and Stella Artois. But it also owns a lot that you may not have heard of like Antarctica, which is brewed…wait for it…in Brazil. Together with the malodorous Cass beer from South Korea, AbInBev owns over 40 different brews from all over the world. However it’s the market in Africa that has eluded this beer behemoth all this time. Hence, it’s looking to expand with SABMiller who already has quite the handle on that continent. Even though this is still all just talk, news of the potential merger sent shares of SABMiller up 23%.

On a high note…

Image courtesy of Paul/FreeDigitalPhotos.net

Image courtesy of Paul/FreeDigitalPhotos.net

There’s nothing like a good old-fashioned accounting error to generate marijuana sales. Because of a glitch in Colorado State Tax laws an automatic suspension of new taxes was conveniently triggered. The marijuana tax was the lucky winner and was met with great enthusiasm by the state’s marijuana users who regularly shell out an extra 25% in taxes for the stuff. It all started because Colorado under-estimated tax collection from last year. When that happens…poof…25% in sales and excise taxes magically disappears for one special day. Today being that day. Mason Tvert, director of communications for the Marijuana Policy Project said, “It’s crazy how much revenue our state used to flush down the drain by forcing marijuana sales into the underground market…It’s even crazier that so many states are still doing it…” Amen. Also interesting to note (well, to me anyway) is that sales of marijuana outpaced those of alcohol and tobacco. With marijuana raking in tax revenues of $70 million, alcohol only managed to eke out a paltry $42 million in tax revenue. Marijuana users spend approximately $1,800 a year on the stuff while consumers spend $450 on alcohol and just $315 a year on tobacco.

On a low note…

Image courtesy of  Mister GC/FreeDigitalPhotos.net

Image courtesy of Mister GC/FreeDigitalPhotos.net

Just when you think things are starting to look fiscally up, the U.S. Census Bureau steps in to to ruin the day. The bad news is that the median household income has been going down. As in, not up. In 2013, median income in the United States was $54,462. That number should have gotten bigger. But alas, 2014 brought with it a median income of $53,657. Which makes no sense since the economy seems to be recovering and employment is hovering at seven year lows (even though wages haven’t been picking up any speed). If that’s not bad enough, the poverty rate has also gone up from 14.5% in 2013 to 14.8% in 2014. Apparently, the poverty rate and the median income are not considered statistically significant, at least according to the Census Bureau researchers who presumably, make more than $53,657 a year. Just saying. And because it wouldn’t be any fun not to inject some politics into this discussion, the Democrats are rejoicing since the number of people roaming the streets without health insurance fell from 42 million people to 33 million. In an attempt to sap their mojo, however, Republican Paul Ryan, who chairs the House of Representatives Ways and Means Committee, advised Dems not to pat themselves on the back just yet, since clearly their efforts to fight poverty aren’t working.