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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Image courtesy of digitalrt/FreeDigitalPhotos.net

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.

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The Hostess with the Mostess is Baaaack; Airlines Take a Fiscal Hit, Yet Consumers Shed No Tears; Starbucks Set to Raise You Up

 

Sugar high…

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

No need to get all sentimental here, but Hostess has arrived. Again. The Twinkie maker is set to go public in the fall, following a deal with Gores Holdings which picked up a huge stake in the company. It seems like only yesterday when Hostess rode a fiscal roller-coaster that almost had the sweets maker go bust four years ago. But those days are now far behind, as the Ding-Dongs proprietor boasts a $2.3 billion valuation. The folks who bought the company, Metropoulos & Co. together with Apollo Global Management LLC, were the same ones who restored Pabst to its original glory. They picked up Hostess for $185 million and borrowed another $500 million to basically rebuild the company from the ground up. They did just that, but smaller. Much smaller. Almost all union workers were ousted, equipment was upgraded and even robots were brought in for some labor. Just like “The Jetsons.” Sort of.  Before Twinkies disappeared from shelves for those dark seven months, the company employed 19,000 people, most of them union. Now there are closer to 1,200 employees – not including robots, and more than 95% of them are NOT union workers. Top brass also unloaded Wonder Bread and Nature’s Pride, got products into movies theaters and restaurants, launched a new marketing campaign with celebs, including the illustrious Will Ferrell and threw in a countdown clock in New York’s Times Square for New Year’s. Hostess also doubled the shelf life of its products to 65 days. You might not find that especially appetizing, but investors sure did. And in case you were skeptical about the Will Ferrell choice, then consider that Hostess’s market for sweet-baked goods is up over 16% and posted $650 million in revenue for 2015. The company is now poised to hit $772 million in revenue for 2016 and by 2017, profit is expected to grow to $101.8 million.  If you’re still not convinced that the Hostess tide is turning, then look out for frozen fried Twinkies, making their coronary debut in a few weeks. Then we’ll talk.

Karma, I tell you…

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Image courtesy of Iamnee/FreeDigitalPhotos.net

Looks like the airlines have taken a hit and I suspect no one feels too sorry for the industry’s top players. Delta,  American Airlines, United Airlines and even Southwest posted declines between 12% and 31%. So sad, no? The demand just wasn’t enough for air travel and that, coupled with some other factors, made for some very unpleasant earnings and share declines. But cry me a river. These are, after all, airlines we are talking about. In my most humble opinion, it sometimes feel that they make a sport out of fleecing travelers. Just saying. Delta shares fell on the news that its revenue per each seat flown one mile dipped by 5%. Despite the wordiness of that calculation, it is how airlines measure their success. It also them helps determine just how much pricing power they have. And wouldn’t ya know it. They currently don’t have as much as they’d like. For now anyway. And that’s welcome news for travelers who aren’t too happy shelling out big bucks for uncomfortable seats. Delta, the second largest airline, actually had been expecting the decrease, but a smaller one of no more than 4.5%. The airline also ate a $450 million loss because they bet against fuel prices. Actually, Delta bet that fuel prices would jump and locked in some fuel purchase contracts called hedge contracts. Prices did, in fact, jump. Just not as much as Delta had hoped they so Delta ditched the contracts and ate a half billion dollars on them. So sad, no?

Nothing to buzz about…

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Image courtesy of zirconicusso/FreeDigitalPhotos.net

It’s July, oh faithful Starbucks drinker and do you know what that means? It means that it’s time for the price of your caffeine fix to go up. After all, it’s tradition. Actually, the tradition is to raise the prices during the first week of July, yet here were are and no increase. But fear not because Starbucks already made a statement that a price increase is on the horizon. Besides, due to a pricing glitch, some loyal drinkers were already charged that increase. Oops. However, those unfortunate consumers could have only been overcharged by, at most, 30 cents. There’s no official word yet on which drinks will be getting pricier, but  the ones that do go up will only go up by as much as – you guessed it – 30 cents. There is one more caveat, though. The amount of money a drink increases varies by region. So perhaps a move might be in order. Just saying. The fact is coffee futures keep going higher and are up over 10% just this year. Even if you are annoyed that your coffee habit is about to eat a bigger chunk out of your bank account, Starbucks knows that you’re still gonna keep whipping out the cash for it. In any case, if you think you did get overcharged on your recent Starbucks purchase, you can call the customer service hotline at 1-800-782-7282 to request your refund.

NYSE Gets Be-Glitched; Jobless Benefits Rise, But Nothing to Worry About. Yet; IMF Blames US Over World’s Slow Growth

Not such a NYSE day…

Image courtesy of  cooldesign/FreeDigitalPhotos.net

Image courtesy of cooldesign/FreeDigitalPhotos.net

Move over Greece and figure it out already. The outage glitch at the New York Stock Exchange (NYSE) is now taking center stage. The trouble is believed to have started Tuesday night when an upgrade was in progress. Problem is, by 7:00 am the next morning the issues seem to have not been resolved and traders were having difficulty connecting. At 11:00 am a warning was issued that the tech problems were being investigated. But, by 11:32 am, NYSE figured it would be a good time to halt trading. Good thing trading was able to shift seamlessly to other exchanges, as the US enjoys a system where there’s a lot of overlap in its financial markets. (Take that IMF: see below). As for NYSE, trading transferred to a back-up unit in New Jersey. So don’t bother making fun of anybody from there for a really long time. However, it still didn’t go unnoticed that it was the biggest outage in two years, that happened to coincide with technical glitches by United Airlines and the Wall Street Journal. Some suspect that it was no coincidence that all three of those systems experienced glitches. Even FBI Director James Comey said, “We’re not big believers in coincidence either. We want to dig into that part.” Although, at this point in time there’s no way to know what caused the glitches and if they’re at all related.

Speaking of glitches…

Image courtesy of xedos4/FreeDigitalPhotos.net

Image courtesy of xedos4/FreeDigitalPhotos.net

Well it’s not really a glitch…maybe just a hiccup – a summer hiccup.  The Labor Department released its numbers and well, it’s sort of a bummer. Turns out that applications for jobless benefits rose this week by 15,000 applicants to a total of 297,000 people. That is the highest number it’s been since February, when that awful figure hit a very unpleasant 327,000. However, there is a silver lining here, I kid you not. Most of those applications came from Michigan and Ohio and are likely due to auto-plant shutdowns who are in the midst of retooling its models for the next year. At least that’s what the experts think and well, they’re probably right. Anyways, it’s a lot more reassuring than any other reason experts can think of. As it stands, 2.33 million people are receiving jobless benefits (I’m pretty sure there’s an oxymoron somewhere in there), and while that figure may seem rather high, it is still 10% less than last year at this time. Besides, last week unemployment hit a seven year low and the number of folks applying for jobless benefits on a weekly basis has remained under 300.000 for over four months. All the more reason to breathe a sigh of relief. Sort of.

Blame it on the United States, why don’t you…

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Image courtesy of jscreationzs/FreeDigitalPhotos.net

Maybe they’re just bitter because the American Women’s Soccer team won the World Cup Finals, but according to the International Monetary Fund, the United States is to blame because the rest of he world is experiencing slow growth. The IMF is predicting that the world’s growth will grow at a pace of 3.3%, .2% less than what it predicted back in April. And that, my friends, is what you call a downgrade. That is apparently the slowest growth pace since 2009, when there was a recession in effect and the economy didn’t grow but, in fact, shrank. Because the United States economy is apparently the biggest one in the world, and because we had a particularly frightful winter, fiscally speaking, the economy shrank .2% between January and March. When the the U.S economy shrinks, it drags down the rest of the world. So they say. Meanwhile, Greece’s inability to balance its books has been dominating financial news, yet its troubles are predicted to have a limited impact on the rest of the world. Even China, which happens to have a gargantuan economy, is walking away unscathed despite the fact that its stock market plunged. According to Mr. pish-posh IMF research chief Olivier Blanchard, “We don’t see it as a major macroeconomic issue.” Whatever.

United Sues Resourceful Computer Whiz; Twitter Is Making A Follower Out of You; California’s Bagged Out

Hide and seek the city…

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Image courtesy of anankkml/FreeDigitalPhotos.net

United Airlines and Orbitz are suing a 22 year old computer whiz for doing something that isn’t necessarily illegal. The very resourceful and industrious Aktarer Zaman found a nifty little way to score some reasonably priced seats on airlines and runs a website called Skiplagged.com. Dubbed the “hidden city” strategy, you simply purchase a ticket that happens to have a layover in your destination city and then just skip the last leg of the flight. But you need to make sure it’s a one-way ticket and don’t check bags, since the bags will most definitely end up in the final destination even if you have no intention of ever going there. While others call the idea genius, United Airlines and Orbitz have, no doubt, other choice words for Zaman and are seeking $75,000 in lost revenue. (Even though airlines are reporting record profits, but I digress). Zaman, however, alleges he hasn’t made any profit from the website and argues that all he did was expose an “inefficiency.” United and Orbitz call it unfair competition and “strictly prohibited travel” (boohoo), even though the airlines are well aware of “hidden cities” which have been around for many years now.

I’m a leader, not a follower!

Image courtesy of Master isolated images/FreeDigitalPhotos.net

Image courtesy of Master isolated images/FreeDigitalPhotos.net

Twitter started a new experiment by selling ad space on your timeline. But Will Shatner doesn’t like it. Not one single bit. All the hoopla began when the Star Trek legend noticed a MasterCard ad appearing on his “following” list.  This peeved the actor and Priceline sheller quite a bit, especially because he wasn’t following MasterCard’s account. Shatner then tweeted, “Why am I following MasterCard when I didn’t add them? I do not appreciate this.” Here here, Captain Kirk. Mr. Shatner, and presumably others, don’t like that it might be assumed that they are promoting and endorsing brands just because Twitter put those brands on their “following” lists. Shatner, it appears is not the only celebrity who seems to have brands appearing in their following lists.  Non-celebrities have this issue too, but who cares about them. While Twitter has been engaging in this practice since 2013, there is no word yet on how the micro-blogging website will proceed with Mr. Shatner’s complaints. And those of regular people, as well.

I’m bagging you to please stop…

Image courtesy of winnond/FreeDigitalPhotos.net

Image courtesy of winnond/FreeDigitalPhotos.net

Looks like Californians weren’t digging the plastic bag ban, after all. Opponents of the plastic bag ban collected a whopping 800,000 plus signatures to force a referendum on the issue, an especially impressive feat since only 504,000 signatures were actually needed. The American Progressive Bag Alliance (I swear I could not make that up if I tried) which is made up of several business groups and plastic bag manufacturers said that Senate Bill 270, aka the plastic bag ban, has less to do with helping the environment than it does with money. The APBA said “SB270” was basically a “back room deal” since stores make money by getting consumers to purchase reusable bags from them. Californians Against Waste are hearing none of that, arguing that the culprit-y bags not only pollute the environment but then have the nerve not to bio-degrade on top of it. The group also says that plastic bag manufacturers profit by selling $200 million worth of bags so it’s in their best interest to keep those bags around. In any case, once the signatures are validated, the fate of the bags, reusable and otherwise, will rest in the hands of California voters.

Swiss Market Offers Up Fascism With Coffee; GM Earnings Put the Brakes on Recall Issues; Airline Industry Earnings Show No Signs of Ebola

How do the Swiss say “Oops”?

Image courtesy of amenic181/FreeDigitalPhotos.net

Image courtesy of amenic181/FreeDigitalPhotos.net

Migros, a major Swiss supermarket, is having a bad, embarrassing week. All because of some coffee cream containers. Except they weren’t just any coffee cream containers, unless of course you’re used to seeing Adolf Hitler and Benito Mussolini gracing food packaging. “Usually the labels have pleasant images like trains, landscapes and dogs,” a spokesperson said. Yeah. Just not today. I guess someone’s getting fired. Migros called it an “unforgivable blunder” when customers began to complain about the portraits of murderous fascists glaring back at them faces as they poured cream into their coffee. Migros, however, is blaming a subsidiary that designed the series of 55 motifs that ended up in scores of restaurants, cafes and kiosks.

Recall debacle? What recall debacle?

Image courtesy of renjith krishnan/FreeDigitalPhotos.net

Image courtesy of renjith krishnan/FreeDigitalPhotos.net

Despite its disastrous mess of a year, thanks to its ignition switch recall, auto company GM still managed to crank out some insanely impressive earnings. Apparently the U.S. and China are either very forgiving or willing to look past the all company’s scandals and recalls because strong sales in those regions helped GM rake in $1.38 billion or $0.81 per share. Those numbers are nearly double the $698 million $0.45 per share earnings the company hauled in last year at this time. Over 880,000 GM vehicle were sold in North America alone. Russia and Europe weren’t feeling the love for the US car company but no worries because worldwide the company sold close to 2.5 million vehicles. But it’s those trucks I tell you, that consumers are totally digging as GM carries a 24% market share of those babies.

You are free to roam about the cabin…

Image courtesy of luigi diamanti/FreeDigitalPhotos.net

Image courtesy of luigi diamanti/FreeDigitalPhotos.net

Their passengers may not always be healthy but their profits sure are. Indeed the airline industry as a whole has been seeing solid earnings across the board and it’s not their lucky stars they can thank but rather the price of fuel, which as I mentioned yesterday has been going down. JetBlue, Souhwest and United Airlines all rocked their earnings announcements. Even American Airlines added another record quarter of  $942 million, way over the $289 million it pulled in last year at this time. The airline also reported a staggering $11.1 billion in revenue. Considering my awful experiences on American Airlines, those numbers are nothing short of miraculous. As for Ebola scaring off travelers? Well, it’s not. ‘Nuff said.

 

Alibaba Raising the Roof on the Range; Olive Garden’s Breaking Breadsticks; United’s Flight Attendants’ Six-Figure Payout

Oh Ma gosh…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Just when you thought China’s biggest e-commerce site couldn’t get any bigger, it keeps doing just that. While last weeks’ range for its highly anticipated initial public offering was hovering in the $60-$66 range, already an impressive feat, this week the range just grew that much larger. The price now looms in the $66-$68 range. There is just so much ridiculously insane demand for this IPO that CEO Jack Ma, a former school teacher and China’s richest man with a net worth of $21.9 billion, had no problem raising the money for the IPO on his roadshow. And no, this type of roadshow has nothing to do with nosebleed seats and bad beer. When a guy like Jack Ma goes on a roadshow he is trying to raise in interest and money for his company. Something which he had no trouble doing in the last couple of days. The company has raised $21.8 billion…so far.

Dude, lay off the breadsticks…

Image courtesy of Witthaya Phonsawat/FreeDigitalPhotos.net

Image courtesy of Witthaya Phonsawat/FreeDigitalPhotos.net

It seems Olive Garden needs to lay off the breadsticks and push the alcohol. At least according to Starboard Value LP, a firm that holds an 8.8% stake in Darden restaurants, Olive Garden’s parent company. Starboard is also taking issue with Olive Garden’s unlimited salad offerings. And don’t even get Starboard started on the pasta. “How does the largest Italian dining concept in the world not salt the water for pasta?” Starboard’s words, not mine. If you don’t believe what you’re reading then check out its just released 294 page turnaround plan. Darden rebutted with its own charming little 24 slide presentation challenging the report whose suggestions, Darden feels, are “not based on reality.” Though, to be fair, Darden has already been implementing many of the other suggestions. The question, however, is can you really blame Darden’s poor last quarter earnings on unlimited breadsticks?

Pay day…

Image courtesy of biosphere/FreeDigitalPhotos.net

Image courtesy of biosphere/FreeDigitalPhotos.net

It pays not to be a flight attendant on United Airlines. Literally. The company, which currently has over 23,000 employees, apparently has too many flight attendants. So the airline graciously and, in my humble opinion, generously, reached an agreement with the Association of Flight Attendants to offer up to 2,100 early buyout packages to flight attendants (assuming they meet certain requirements, of course). Some of those packages will be worth up to $100,000. Yes. $100,000 to quit your job. Incidentally, United Airlines was the only major airline to post a loss this past quarter.  Also incidentally, it’s cheaper to employ less experienced flight attendants. I’ve had a few flight attendants  – of varying degrees of experience – who I’d like to see take that package. Of course, I wouldn’t give them $1 much less $100,000. Unfortunately, all the money I’ve plunked down just to have the privilege of traveling on United Airlines doesn’t entitle me to an opinion on the matter.

Hamas Terrorists/Murderers Win Big Over the FAA, Boeing Not Up Up and Away and Facebook Sooo High Up

Yes, the terrorists have won…

Image courtesy of FrameAngel/FreeDigitalPhotos.net

Image courtesy of FrameAngel/FreeDigitalPhotos.net

It looks like the murderous terrorist Hamas organization scored a major victory against the world, and the US commercial airline industry as it got the FAA to ban flights to Israel. All major carriers including Delta and United Airlines have canceled flights because they are concerned that bloodthirsty Hamas will bring down aircraft with its never-ending supply of missiles obtained with lots of assistance from its nuke-happy friends in Iran. It’s a curious ban since there isn’t one in place for Afghanistan, Pakistan or Yemen – which begs the question as to whether or not the ban was really born out of safety concerns or just blatant run-of-the-mill anti-Semitism and sympathy for terrorists. Hmmm. The ban is expected to reduce revenue for airlines by tens of millions of dollars –  if not more. A major coup for Hamas, no doubt. But at least former New York City Mayor Michael Bloomberg who knows a things or two about money and politics, showed some major falafel balls by coming to Israel on an El Al flight to show solidarity for a country that is under constant attack by butchers whose sole purpose in life is to murder every single Jewish person on the planet.

Not exactly taking off?

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Aerospace and defense company Boeing released its earnings today and all I can say is: Wow. “Wow” for two very distinct reasons. Reason number one is that the Chicago, Illinois-based company pulled in a profit of over 50% with a net income of close to $1.7 billion and $2.24 earnings per share. Boeing didn’t just beat the Street’s estimates it pummeled them. As for “wow” reason number two: The stock isn’t soaring, flying high or (insert any number of aviation-related analogies here) despite its amazing profits. That’s because Boeing’s $22.04 billion revenue was lower than Wall Street’s $22.3 billion estimate. Potatoes. Puhtatoes, I know, but still, when Wall Street has expectations, you best meet them. The company delivered 181 new aircraft this year – a 7% increase –  with over 780 more in the works. It’s all very promising but Wall Street wasn’t as smitten with the fact that the company got a one-time $524 million tax-cut that helped bring in that profit. It probably also didn’t help that Malaysia Airlines flights 370 and 17 were both Boeing jets.

“Like”

Image courtesy of Master isolated images/FreeDigitalPhotos.net

Image courtesy of Master isolated images/FreeDigitalPhotos.net

But guess who did soar? Facebook. Okay so that’s not exactly shocking news. Maybe just a little bit to the investors who were a tad bit skeptical over Facebook’s lack of mobile ad revenue. But it looks like this quarter cleared up those concerns as the social media giant is up over 60% propelled by those very ads and the cash they are bringing in – even as I write this. Analysts expected sales of $2.8 billion but hellooooo – this is Facebook we’re talking about and it pulled in more – $2.9 billion, naturally. Net income was up over $790 million and $.30 a share. That’s way more than double from a year ago. And with 1.5 million advertisers, and over 1.3 billion users, Facebook and its investors have a lot to “like.”