It has been a while since I have had the pleasure of discussing Starbucks (NASDAQ: SBUX) and its business issues. That changes today, as Moody's Investors Service downgraded Starbucks' $550 million senior unsecured notes to 'Baa3' from Baa2.'
The move takes into account what the ratings house sees as challenges lying ahead for the coffee company. In addition, Moody's cut Starbucks' short-term commercial paper rating.
An analyst with Moody's stated that the "downgrade reflects Starbucks challenge of refocusing the business without significantly damaging its brand, as well as weaker than anticipated operating performance" over the intermediate term. The biggest problem facing Starbucks is seen as weakness in consumer spending and increased competitive pressures.
Sorry Starbucks, but I am not buying it. In fact, I -- like many of your former customers -- am turning to your competitors, even in the stock market. Although the stock is trying to weather the storm and advance, it sure looks like it is about to meet resistance from its descending 20-month moving average. Starbucks has not closed a month atop this trendline since early 2007 and it is going to take a tremendous push to top the moving average this month.
If you are looking for a good bullish play in the restaurant world, do what many of Starbucks' former customers are doing, switch to McDonald's (NYSE: MCD).
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Reader Comments (Page 1 of 1)
5-15-2009 @ 10:55PM
carlosmessi said...
I like coffee and do think that haitian coffee is the best. But my major concern now is the economy. Why is everything is coming down, I'm scared. Will this economy problem end or do we need another system?
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