MyFoxKansasCity reports that many people are not taking the closure of their local Starbucks (NASDAQ: SBUX) sitting down. If your local Starbucks is among the 600 being shuttered around the U.S., perhaps you would like to join the movement.
MyFox lists four Starbucks there that are closing. And it reports that people are already using e-mail and a Web site to fight the closing. For example, Kansas City H&R Block employees sent out e-mails arguing against the closure -- they suggest that downtown Kansas City is "just starting to grow" and that "their Starbucks has a lot of earning potential." And MyFox reports that Kansas City has set up saveourstarbucks.com where visitors can type in their location, and their comments about "why [they] just can't live without [their] favorite Starbucks location."
Will any of these efforts work? I doubt it. Starbucks probably picked the 600 stores that it's closing based on their relatively low traffic, their costs to operate, and their forecast of future revenues based on the local business and retail climate and the level of competition. It doesn't seem to me that a Save our Starbucks campaign would change any of these factors unless you could prove that you would bring, say, 10 of your friends to the location every week,.
According to people familiar with the matter, the Wall Street Journal reported that Federal Hole Loan Mortgage Corporation (NYSE: FRE) --Freddie Mac -- is considering raising capital by selling up to $10B in new shares to investors. The sources believe this effort may have the potential to avoid a full-blown government rescue.
The Wall Street Journal also reported that, amid U.S. investigations into allegations it helped American clients evade taxes, UBS AG (NYSE: UBS) said some Swiss-based private bankers will stop offering American clients Swiss bank accounts and other services.
Starbucks Corporation (NASDAQ: SBUX) will close store in 44 states plus the District of Columbia, including 88 closures in California, 59 in Florida and 57 in Texas, the Wall Street Journal reported.
Reuters noted that, according to a person with knowledge of the plans, Yahoo! Inc (NASDAQ: YHOO) could renew talks over News Corporation's (NYSE: NWS) Web properties if Microsoft Corporation (NASDAQ: MSFT) gets in the way of discussions with Time Warner Inc's (NYSE: TWX) AOL. Yahoo! is in contact with News Corp. about the assets, but the search engine's talks with Time Warner about AOL are more advanced, the source added.
MOST NOTEWORTHY: eBay (EBAY), Wells Fargo (WFC) and ASML Holdings (ASML) were today's noteworthy downgrades:
Thomas Weisel downgraded shares of eBay (NASDAQ:EBAY) following the company's Q2 results, as they did not see an improvement in the underlying fundamentals. Goldman lowered eBay to Neutral from Buy and cut its target to $30 from $38.
UBS downgraded Wells Fargo (NYSE:WFC) to Neutral from Buy citing valuation and reduced capital flexibility.
Merrill downgraded shares of ASML Holdings (NASDAQ:ASML) to Underperform from Neutral as they believe the company's demand slowdown could carry into next year.
OTHER DOWNGRADES:
Starbucks (NASDAQ:SBUX) was cut to Neutral from Buy at Piper.
Nokia Corp. (NYSE: NOK) shares are up over 7.4% in premarket trading after the world's largest maker of handsets said second-quarter profit fell 61% to $1.75 billion, or 46 cents per share, while sales rose 4% to $20.87 billion. Excluding items, Nokia's profit rose 8% to $2.18 billion. Nokia beat estimates of earnings of 56 cents per share on $20.05 billion in revenue, according to Thomson Financial. The mobile phone maker slightly raised its forecast for the mobile phone industry, saying volume would grow 10% or more in 2008.
Continental Airlines (NYSE: CAL) are up again this morning after climbing 38% Wednesday with the rest of the airline stocks. Continental swung to a second-quarter loss, hurt by record high fuel prices and weakening economic conditions. Still the losses of $3 million, or 3 cents per share, or excluding one-time items totaled $25 million, or 25 cents per share, beat expectations of a loss of 49 cents per share.
Yum Brands (NYSE: YUM) shares are down 4.3% in premarket trading after it reported a second-quarter profit of $224 million, or 45 cents a share. Revenue rose to $2.65 billion from $2.37 billion a year ago. While this beat estimates, and while the company raised its earnings growth forecast for the full year to 12% from 11%, investors were concerned about rising food costs which hurt profit margins in the second quarter.
It seems that Apple Inc. (NASDAQ: AAPL)'s new 3G iPhone was sold out in Germany after less than a week. Deutsche Telekom AG's T-Mobile division sold 15,000 iPhones and it's not clear when Apple will be able to deliver more iPhones for the German market, Financial Times Deutschland reported.
Shares of eBay Inc. (NASDAQ: EBAY) are up about 2% today, ahead of the announcement of its quarterly financial results after the close. What to expect when the online auction site reports?
Well, if you're interested in numbers, eBay indicated that second-quarter earnings will be between 30 and 32 cents per share, or between 39 and 41 cents per share on an adjusted basis. The company also predicted revenue of $2.1 to $2.15 billion. Analysts polled by Thomson Financial expect eBay to be pretty much in-line with estimates, or just slightly better, and post adjusted earnings of 41 cents per share on revenue of $2.17 billion.
According to Jefferies & Co., eBay experiences "strong Marketplaces listings growth and ongoing strength in payments and non-gross merchandise value, or GMV, businesses." On Tuesday, RBC Capital Markets maintained its Sector Perform rating on eBay, but reduced the target price from $40 to $35 due to "continued transition of the company's platform and low visibility into the core marketplaces platform," and due to some misgivings about month-to-month worsening trends. However, Morgan Stanley, Citigroup and Banc of America actually raised estimates recently.
Starbucks' (NASDAQ: SBUX) Howard Schultz came back to the CEO role in late 2007 to hopefully rescue the once great concept he has so passionately developed since the 1980s. Fair enough. Could this be the second coming of Steve Jobs of Apple (NASDAQ: AAPL) or would it resemble the mediocre return of Michael Dell of Dell (NASDAQ: DELL)? The jury is out and time will tell.
For now, I have one major bone to pick. Howard, let's take some time here to review the store closures. I am sure a mid-level vice president made the geographical decisions. But I hope you really scoured the list carefully.
Let's take an example: Minnetonka, Minnesota. Howard, I'm sure it may not mean much to you. After all, you were raised in New York and currently live in Seattle, so Minnesota may be flyover country. Minnetonka is a western suburb of Minneapolis sporting a growing population of about 52,000. Minnetonka is a fairly upscale suburb with near full employment. Just for your information, Minnetonka is also the world headquarters for the biggest private company in the world; probably one of your suppliers. The company is called Cargill -- just in case your VP missed it.
It's on the Starbucks hit list. You are closing the Minnetonka store. Are you nuts?!! I have written in the past that this store should serve as one of your models on how to do it right. Sure, economics eventually have to make sense. This store is about three years old and the growth of traffic has been steady. Used to be one person in line at 10:30 am, now it's common to see a continuous stream of 7-8 people in that off -hour line. Early mornings are very busy.
After just recently announcing the closure of 600 stores in the U.S., coffee powerhouse Starbucks Corp. (NASDAQ: SBUX) will unveil protein smoothies and new iced beverages in some of its markets as early as next week. Starbucks hopes these protein drinks could help pump up sales and profits amid a downturn in its business due to the sluggish consumer economy in the U.S.
When the company decided to drop its breakfast sandwich line because the offerings caused olfactory interference with its trademark roasted coffee smell, at least smoothies won't plug up customer nostrils, eh? Starbucks wants to find a replacement for the slow-selling Frappuccino line of ice-blended drinks in California and Florida. Together, those two states account for about a third of the chain's U.S. sales alone.
So, Starbucks is going after the non-coffee drinker with a premium-positioned product that most fast-food chains don't sell: the protein smoothie. Not that this is a dangerous move, but Starbucks is not the only one to sell smoothies these days. Jamba Juice (NASDAQ: JMBA) sells plenty of smoothies, and coffee competitor Dunkin' Donuts does as well. Starbucks will also offer a new cold-iced beverage that will be a low-calorie drink offered in fruit, dairy or yogurt-based flavors. However, with McDonald's Corp. (NYSE: MCD) also testing the smoothie offerings in some of its markets, Starbucks can't be given a pass here to these new products, certainly not as sort of overall savior for the company. If you're not a Starbucks fan, would you start going there just to purchase a smoothie?
Starbucks (NASDAQ: SBUX) is in such a pickle. On the one hand, it's famous for its java-room atmosphere and its quality coffees that cost an arm and a leg to acquire. On the other hand, growth is gone and its stock is in the dumps, forcing management to do what is necessary to bring traffic into its locations. According to this article, the company will be experimenting with vouchers and discounts at many of its stores throughout the summer. One example given involves a free iced coffee promotion in several major cities.
Just the other day, I wrote about increased competition in the coffee wars from McDonald's (NYSE: MCD), which continues to bolster its java strategy. Things are getting tough out there for Starbucks, and it's a shame that the company has to go this discount route. It's a funny thing when it comes to sales -- people get used to them awfully quick, and in the case of Starbucks, it sort of blemishes their model of making people pay up for their exotic lattes. Starbucks needs to be careful and not be too aggressive in offering discounts. Of course, the natural response to my assertion is, if the company is doing badly, isn't it management's responsibility to step up and get people to cross the threshold of their locations? It sure is, but one thing I've always noticed when any kind of retailer isn't performing like it used to is that it doesn't tend to implement new marketing campaigns that focus on the experience a consumer gets when she walks through the door. I think that can be more effective than waging a price war.
That's what I would say to Starbucks. Create an innovative, unique marketing campaign based on the image of Starbucks and try to keep people paying those high prices. Granted, that's easier said than done, considering everyone has a tight budget these days. Giving away free coffees is fine on one level, but it's a slippery slope for a company that based its model on expensive beverages.
Disclosure: I don't own any company mentioned; positions can change at any time.
Patrons and employees alike await the final decision about which Starbucks (NASDAQ: SBUX) stores will be closing and who will be getting kind notes explaining why closing 600 stores is necessary, making their jobs not.
According to a report in The Wall Street Journal, about 50 stores have already been notified that they will be closing by July 31, and the list will be made public by July 15. The Journal writes of anxiety for the Starbucks faithful who have come to appreciate the caffeine brew and do not have satisfactory alternatives.
There are two stores in walking distance of my office and when Starbucks opened the second one about 18 months ago I was very surprised. However, I will not be surprised if the newer store is among the casualties.
McDonald's (NYSE: MCD) has always been known for its famous French fries. Interestingly enough, though, it seems to me that the fast-food chain is becoming known these days for its coffee. I never thought McDonald's would invest as much as it has in coffee, but it looks like it's doing the right thing. According to this Bizjournals piece, McDonald's is putting its weight behind a coffee-bar initiative called McCafe. The program is being tested in various locations now and will be available nationally sometime next year.
I love the timing on this. After all, Starbucks (NASDAQ: SBUX) isn't doing so well. Not only is its stock hovering around 52-week-low territory, but the java king recently announced some store closings. That's almost unimaginable. Remember the days when every street corner needed a Starbucks? Yeah, those days are long gone. And I think McDonald's is smart in attempting to expand the brand equity of its coffee-brand portfolio. People need more of a reason to go to the palace of the hamburger-serving clown than just Big Macs these days, since the Big Mac and its various fat-saturated colleagues aren't as popular in these health-conscious times. I'm not saying drinking coffee is an exercise in life preservation, I'm just saying that it's good for McDonald's to focus on less controversial fare.
This significant foray into coffee is arguably a key reason for the company's stellar stock performance over the last few years and its competitive edge against rivals Burger King (NYSE: BKC) and Wendy's (NYSE: WEN). According to the AOL Finance snapshot, McDonald's is very much in the green for every timeframe save for year-to-date, which sees the stock down less than 1%. That's strength. McDonald's is a little below its 52-week high, and it might make for an interesting investment idea. At the very least, you can look forward to its McCafe program.
Disclosure: I don't own any company mentioned; positions can change at any time.
In a brilliant article in The New York Times, the paper points out that of all the mistakes that Starbucks Corp. (NASDAQ: SBUX) made in its expansion, picking real estate locations may have been the worst. Much of the analysis for the piece came from talking to real estate brokers. The paper writes, "In some cases, brokers say, Starbucks misjudged the risks of putting stores close to each other, leading to the decline in same-store sales."
It is astonishing that Starbucks would make such basic errors and speaks to what happened to management during the period when founder Howard Schultz was absent from the CEO job. The team that replaced him said it believed the company would eventually have 40,000 store worldwide. It clearly cut corners in terms of planning to get there.
The real trouble with the real estate location decisions is that it may take a very long time to fix. Closing stores may be easy, but finding better spots, negotiated for the space, and building out new stores will be time consuming and, perhaps, expensive.
Schultz and his minions are paying for rampant growth, and the poor souls who worked for him are paying more. Almost 12,000 will lose their jobs.
Douglas A. McIntyre is an editor at 247wallst.com.
I'll admit the headline is a bit deceptive. On one hand McDonald's (NYSE: MCD) has seen a resurgence in its business and frankly, the shares have done very well. In fact since McDonald's went through its own set of problems five years ago, the stock has since tripled in value.
The parallels between Starbucks (NASDAQ: SBUX) and McDonald's are very eerie. Starbucks has hit the proverbial wall after a successful ride from 1992 to 2007 as one of the premier GameChanger stocks around. Starbucks, like McDonald's over-expanded its store base in the United States and began to cannibalize its own revenues. Starbucks, like McDonald's, lost its principle focus and did not tend to 'what got them there".
In late 2002 McDonald's stock had just finished a 4 year run of losing 70% of its value. The company was becoming a hodgepodge of different menu items, culminating with the disastrous release of the McLean Deluxe, which was not even all beef! Advertising and marketing programs were a mish-mash of geographical themes yielding no consistency whatsoever. McDonald's even posted, for the first time in its illustrious history, an operating loss in 2002, and experienced negative same store sales for the first time, as well.
Then CEO Jim Cantalupo said enough was enough. McDonald's closed 700 unproductive stores (sound familiar?) and re-focused its menu and advertising campaign.
After a brief refreshment, today just ended up being ugly rather than what many were hoping would be a boring day. Today's action was likely due more to analyst concerns, but a late-day news report on a security breach scare at LAX airport may have added stress to a trading day that would have otherwise been quiet. The markets are grossly oversold, but there just seems to be very few reasons for traders to hit their "BUY" buttons on keyboards.
These are UNOFFICIAL closing bell levels for major index readings:
General Motors (NYSE: GM) was the daily disaster due analyst call. Merrill Lynch downgraded the stock to Underperform and noted that "the chances of bankruptcy aren't impossible." 24/7 Wall St. noted the same weeks before, and we even posted odds on what the chances are that major auto or airline companies would have to file for protection by the end of 2008 to early 2009.
Starbucks (NASDAQ: SBUX) indicated plans to close 600 unprofitable domestic stores and incur pre-tax charges of $328-$348 million, including asset write-downs of $200 million.
Deutsche Bank says: "With US consumers still reeling and McDonalds (NYSE: MCD) on the cusp of a nationwide specialty coffee rollout, it is too early to call a bottom on fundamentals – maintain Hold."
SBUX July option implied volatility of 42 is near its 26-week average of 39 according to Track Data, suggesting non-directional price movement.
Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
U.S. stock futures were higher Wednesday morning, as Wall Street could try to having yet another positive session. While Starbucks news of store closing and reports Microsoft may still be interested in Yahoo helped lift sentiment, UnitedHealth already issued a warning this morning. Employment data is also on tap before the market opens.
U.S. stocks finally ended higher on Tuesday. Surprisingly, it was car sales that helped the mood on the Street as as June sales came in not as bad as expected. The Dow industrials ended 32 points higher, or 0.28%, the S&P 500 added 4 points, or 0.38%, and the Nasdaq Composite added 11 points, or 0.52%.
Today, investors will have the ADP June private sector employment figures to chew on ahead of the government's report tomorrow. The employment report is expected to be released at 8:15 a.m. EDT. Then, at 10 a.m., May factory orders are due out.
Also on the docket today is weekly crude inventories, usually released at 10:30 a.m. EDT. While oil came off highs Tuesday due to a slightly stronger dollar, it again rose above $141 a barrel Wednesday, due to persistent supply concerns that has analysts warning of higher prices yet. An IEA report saying supplies will remain tight and demand will likely grow despite higher prices helped push prices higher.
MyFoxKansasCity reports that many people are not taking the closure of their local Starbucks (NASDAQ: SBUX) sitting down. If your local Starbucks is among the 600 being shuttered around the U.S., perhaps you would like to join the movement..gif){kind=logo}
Shares of 
After just recently announcing the closure of 600 stores in the U.S., coffee powerhouse 
Patrons and employees alike await the final decision about which 
I'll admit the headline is a bit deceptive. On one hand
Starbucks
U.S. stock futures were higher Wednesday morning, as Wall Street could try to having yet another positive session. While Starbucks news of store closing and reports Microsoft may still be interested in Yahoo helped lift sentiment, UnitedHealth already issued a warning this morning. Employment data is also on tap before the market opens.
Comfort Zone Investing: Exploit volatility with constant dollar investing
Merck earnings preview: No miracles expected
Apple reports Monday -- buy AAPL before earnings?
