Really, the way Hansen Natural Corp. (NASDAQ: HANS) shares are dropping -- down about 14% as I write this and setting a new 52-week low earlier in the session -- you'd think the company reported disastrous results. Not so!
True, Hansen Natural reported Wednesday a lower-than-expected first-quarter profit due to lower profit margins, but the results weren't that bad. For the quarter, the company's net sales rose to $212.2 million and it earned $28.8 million, or 29 cents a share. Analysts, however, expected 35 cents on revenue of $221, according to Thomson Reuters. The thing is, that compared to last year, profit climbed 43% and revenue jumped 28%. It seems that the Monster Energy brand drinks had a lot do with Hansen's revenue growth, especially the new Java Monster dairy-based coffee drink.
The problem? Already in the fourth quarter investors were concerned about decreasing margins, and this quarter as well Hansen said its profit was hurt by higher costs, including a 34% boost in costs of sales and a 15% rise in operating expenses. Talk about margin squeeze.
According to the article: "I would not be averse to a Fed-assisted transaction," Stumpf said, adding that any deal would have to meet the company's traditional acquisition targets and benefit the bank's acquired customers. Wells has built a reputation as a disciplined buyer over the years, focusing on deals that generate at least a 15% internal rate of return and contribute to the bottom line within three years.
"Fixer-uppers don't bother us," he added.
Who wouldn't want to be part of a deal like this? It's become pretty obvious that JP Morgan Chase got an amazing deal to buy Bear Stearns, and now Wells Fargo wants to join the party.
Athletic apparel retailer Foot Locker Inc. (NYSE: FL) reported that its fourth-quarter profit dropped 23% due to a shorter fiscal year and a drop in same-store sales. Net income fell to $87 million, or 56 cents per share, but after adjustments the company said it earned 23 cents per share in the latest quarter. Revenue fell 10% to $1.48 billion. Analysts polled by Thomson Financial had expected earnings of 44 cents per share on revenue of $1.48 billion.
The company said its same-store sales fell 7.8% percent in the quarter, and noted that the year-ago quarter included an extra week.
For the full year, profit fell 79% to $53 million, or 34 cents per share, from $251 million, or $1.60 per share, in the prior year. Full-year revenue dropped 4% to $5.44 billion from $5.75 billion in 2006.
Foot Locker shares fell 9 cents to close at $11.15, but rose to $11.30 in after-hours trading.
Boeing (NYSE: BA) was upgraded by Bernstein from Market Perform to Outperform. However, Boeing said this morning, PrivatAir has ordered an additional 787-model airplane for $162 million.
Adobe Systems (NASDAQ: ADBE) and McAfee (NYSE: MFE) were downgraded from Buy to Neutral by UBS.
Harley Davidson (NYSE: HOG) was downgraded by Citigroup from Hold to Sell. Shares down over 4% in premarket trading.
Intel Corp. (NASDAQ: INTC) was downgraded by Charter Equity from Buy to Market Perform.
Oppenheimer downgraded JPMorgan Chase (NYSE: JPM) and Wells Fargo (NYSE: WFC) from Outperform to Perform.
Piper Jaffray downgraded Jones Soda (NASDAQ: JSDA) from Buy to Neutral. Shares down over 3% in premarket trading.
Friedman Billings, with its Outperform rating on Alcoa (NYSE: AA), lowered the aluminum maker's target price from $38 to $35.
Altria (NYSE: MO)'s target price was upped to $88 from $79 by Credit Suisse, which rates the stock Outperform.
TD Ameritrade Holding Corp. (NASDAQ: AMTD) reported a 65% rise in its fiscal first-quarter net income as trading activity increased and asset-based revenue continued to grow. The company reported $240.8 million net income, or 40 cents per share, beating estimates by a penny. AMTD shares are up 4% in premarket trading.
MOST NOTEWORTHY: Jones Soda, Whiting Petroleum and Peregrine Pharma were today's noteworthy initiations:
Merriman assumed coverage of Jones Soda (NASDAQ:JSDA) with a Neutral rating and believes shares will languish until interim management resets expectations. For FY08, they expect sales to grow 25%-30%, rather than the consensus estimate of 38%.
Jefferies thinks Whiting Petroleum (NYSE:WLL) is entering a multi-year organic and sees catalysts from the upcoming Bakken well results and positive production response from Enhanced Oil Resources (EOR) projects. The firm started shares of Whiting with a Buy rating and $66 target.
Rodman & Renshaw initiated shares of Peregrine Pharma (NASDAQ:PPHM) with a Market Perform rating, as they would prefer to establish a position closer to mid-08 when key data from its Cotara Phase II study is expected.
OTHER INITIATIONS:
Stanford initiated Tercica (NASDAQ:TRCA) with a Buy rating and $10 target.
Shares of Jones Soda (NASDAQ: JSDA) rallied more than 7% Wednesday and continue to rally another 1.8% today after its CEO Peter Van Stolk stepped down. In the press release, Jones Soda said,
Jones Soda Co. today announced that Peter van Stolk will step down from his position as chairman of the board of directors and as chief executive officer at the end of the year. He will remain on as a member of the board of directors. Board members Scott Bedbury and Steve Jones will take on the interim positions of chairman and CEO respectively while the company conducts a search for a new CEO.
The move comes after a tough year for Jones Soda complete with a huge decline in share price and outrage and a short-lived SEC investigation of insider trading by members of the company's board of directors. Before investors get too excited about van Stolk's departure, they should read what the company said about him in its 10-K filed on March 14th:
Jones Soda Co. (NASDAQ: JSDA) shares are trading higher today after the company announced that its founder, Chairman and CEO Peter Van Stolk will step down from his positions by the end of the year. He will remain with the company as a board member. Board member Scott Bedbury will serve as interim chairman, while board member Steve Jones will serve as interim CEO during the company's search for a replacement. If you think that the company won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on JSDA.
After hitting a one-year high of $32.60 in April, the stock notched its one-year low of $5.86 yesterday. JSDA opened this morning at $6.08. So far today the stock has hit a low of $6.00 and a high of $6.19. As of 10:25, JSDA is trading at 6.16, up 0.22 (3.7%). The chart for JSDA looks are bearish and steady.
For a bullish hedged play on this stock, I would consider a March bull-put credit spread below the $5 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make an 11.1% return in just 3 and a half months as long as JSDA is above $5 at March expiration. Jones would have to fall by more than 18% before we would start to lose money.
Story Stocks or Fairy Tales? Some companies' growth potential causes investors to go weak in the knees, as they did for Crocs. Here are some signs of a hot prospect that's headed for an unhappy ending. As investors look for the next Google or Apple they look to story stocks like Crocs along with Jones Soda, First Solar, Krispy Kreme, Taser, Sirius & XM, Under Armour and more in hopes of making a killing in the stock market. Story Stocks or Fairy Tales? Also: Are These 11 Stocks 'The Next Big Thing'?
Hidden Mortgage Fees As foreclosures continue to plague the subprime market, a little-known industry practice is further hurting homeowners who are already having trouble keeping up with their ballooning mortgage payments: excessive and questionable fees. Struggling Homeowners Faced With Hidden Mortgage Fees | SmartMoney.com
The Greatest Givers BusinessWeek's fifth annual ranking of the top U.S. philantropists include 16 people who gave over $100 million this year. The top giver this year is billionaire investor Warren Buffett who has committed $31 billion to the Bill & Melinda Gates Foundation. The Greatest Givers In Pictures: 50 Most Generous Philanthropists Also: Philanthropy Hall of Fame which includes Paul Newman, Bob Geldof, Bono, Oprah, Jimmy Carter, Lance Armstrong and more.
Priceline (NASDAQ: PCLN)'s higher profits are taking shares up 14%. And Rio Tinto (NYSE: RTP) is up 9% on buyout rumors.
Jones Soda (NASDAQ: JSDA) is trading off 19% due to poor earnings. And Leap Wireless (NASDAQ: LEAP) is off 15% on news that it will have to restate earnings.
Back in August, there was speculation about insider trading on the part of directors at Jones Soda (NASDAQ: JSDA), a then high-flying seller of premium carbonated beverages.
During an 85-day period this spring, five directors sold nearly all of their shares in the company. The stock is about 67% off the high it reached during that period. According to the Seattle-Post Intelligencer, "If the board members and executives had made the trades Monday, when the stock closed at $10.74 on the Nasdaq stock market, they would have gotten a combined $3.6 million, or 45 percent less than what they received."
At the time, I wondered whether it was insider trading, or just plain good timing. Many observers, including our own Sarah Gilbert, had been wondering if the stock had overheated and was trading based on irrational expectations rather than valuation.
Writing about the Jones Soda insiders, I wonder about what directors are supposed to do when they think they hold overvalued stock: "Does she have some moral obligation to hold the stock, or should she try to dump it before it plummets as investor exuberance subsides?"
In any case, the SEC has terminated its informal investigation of the trades, and the directors will get to keep their well-timed trading gains -- that was more than 50% higher than its current price.
Have you ever watched your favorite NFL team and thought to yourself, "I wonder what their locker room tastes like?" The creative team at Jones Soda Co. (NASDAQ: JSDA) is thinking Seattle Seahawks fans have, and has designed a few new sodas that will offer its drinkers just such a taste experience as Perspiration and Dirt.
Seattle-based Jones Soda began taking online pre-orders yesterday for its new soda flavors that it thinks accurately reflects the hard work of professional football players. I don't know about you ... but I have personally never watched football and found myself wondering what the players' sweat would smell like, much less taste like. But if by some chance you have found yourself obsessed with not knowing the taste of such things, you are in luck!
Welcome to the world of Perspiration soda. According to company spokeswoman Clare Bowles, the new Perspiration brand soda is "kind of salty tasting," and perhaps even more tempting to your taste buds, it has a "stinky football sock" finish. Wow ... my prayers have been answered!!! I never would have dreamed that my desire for a drink with a stinky football sock aftertaste would be fulfilled.
If the members of the board of directors at Jones Soda (NASDAQ: JSDA) weren't trading based on any kind of inside information, they may want to consider starting their own hedge funds. That's how good the timing of their sales was.
During an 85-day period this spring, 5 directors sold nearly all of their shares in the company. The stock is about 67% off the high it reached during that period. According to the Seattle-Post Intelligencer, "If the board members and executives had made the trades Monday, when the stock closed at $10.74 on the Nasdaq stock market, they would have gotten a combined $3.6 million, or 45 percent less than what they received."
CEO Peter van Stolk told the newspaper that the directors exercise options/sell stock as compensation for all their hard work. But the sales, and their uncanny timing, raise a question: If the outside directors were so involved in the management of the company, wouldn't they have been aware of the problems the company was having that led to the demise of the share-price?
Industry experts are questioning the timing of the sales, but maybe we should give them the benefit of the doubt: Even after the sell-off, the stock is trading at 114 times earnings. The stock had been on a tear, and you can hardly blame them for wanting to take some profits... or all their profits.
Regardless of whether the Jones directors were trading inappropriately -- I won't speculate -- this raises an interesting question: What is an executive or director supposed to do when he feels that his company's stock is overvalued? Does she have some moral obligation to hold the stock, or should she try to dump it before it plummets as investor exuberance subsides?
Ultimately, investors should be more worried about the performance of a company than director sales. And given the stock's recent chart, there's plenty of complaining to be done on that front.
Coca-Cola Co. (NYSE: KO) and PepsiCo Inc. (NYSE: PEP), which are betting that people's thirst for bottled water will continue to grow, would probably prefer that the public ignore an experiment that Penn and Teller did on their Showtime series a few years ago.
Using hidden cameras, the magicians videotaped unsuspecting people at a restaurant who were being served glasses of what they thought were expensive bottled water by a steward. What they didn't know was that their beverage came from a hose. The program is called "Penn and Teller [explicative deleted]," which is exactly how I feel about the bottled water business.
The hype around popular brands, including Vitaminwater, whose corporate parent Glaceau Coke recently agreed to buy for $4.2 billion, fizzes upon closer inspection.
While there are people with bad water and unsafe water, most Americans have perfectly fine water coming out of their taps. In fact, as FastCompanypoints out, the two leading brands, Pepsi's Aquafina and Coke's Dasani, are purified municipal water. The Natural Resources Defense Council and other experts have repeatedly pointed out that bottled water isn't as strictly regulated as tap water. An NRDC study actually found that 33% of the waters it tested "violated an enforceable state standard or exceeded microbiological-purity guidelines, or both, in at least one sample."
"There are very few differences between the health benefits of bottled and tap water except in isolated circumstances," said Greg Kail, a spokesman for the American Water Works Association, a trade group representing operators of water systems, in an interview. "In North America, we all enjoy some of the safest drinking water in the world."
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