Funny how companies get religion when there is a takeover threat. It says a great deal about how poorly many big firms are run and how lax their boards are when it comes to supervision.
Anheuser-Busch (NYSE: BUD) now plans to cut 1,000 people and raise prices. It is trying to hold off a bid from InBev. Now that its independence is at stake, it is taking decisive actions. It may not work because the plan probably comes too late. According to The Wall Street Journal (subscription required), "The St. Louis brewer's strategy, laid out in a conference call with investors, included $500 million in new cost savings, and higher earnings targets."
Yes, and what took them so long? Shares of BUD have hung around the $50 range for a number of quarters. Operating profit growth at the brewer has been modest. The InBev offer has driven the shares as high as $62.77. It is not a bad bet that they will go back to $55 if InBev is not successful.
BUD wants investors to think it can simply raise prices in a tough economy and bring in more revenue. That probably won't work. It if would, the company should have done it a long time ago.
Douglas A. McIntyre is an editor at 247wallst.com.
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Reader Comments (Page 1 of 1)
6-28-2008 @ 6:35PM
Ron Mod said...
If Bud is sold, It's SAM ADAMS time. I've drank BUD for over 40 years,eat apple pie and salute the flag.
6-28-2008 @ 7:02PM
mudgard said...
Raise prices???
Oh yea, a sixer costs 6 bucks now. Go ahead, price yourself along the lines of Heineken and Sam Adams at 7 bucks. See which one I buy. Can you say "no brainer!" You should lose some of the insipid commercials and save a few bucks. We know what it is you sell and lets face it, it really is not that good! Better think of something else.
6-28-2008 @ 7:14PM
Don Jones said...
Edgar Allan Poe was noted for his driking most anything, but his choice was ale.
(PoeSpirits.com)
He might have preferred Bud if it were available, but not with a price increase.
7-12-2008 @ 11:54AM
Deb S. said...
The Sell of AB, means the sell of AMERICA. Can You Say Beer Strike.