Cart (0)
VIDEOTicker Shock: Four Reasons Why Starbucks Could Give You a Buzz
Thursday's top stories and stocks with potential to move.
 |
|
But 7 years later, it seems my wife and I are always doing something around the place; earlier this year, we re-did a bathroom, and now she says the next project is the backsplash in the kitchen. Ah, the joys of home ownership!
Asian stocks closed higher. The Hang Seng and the Nikkei were both up north of 3%. Meanwhile, European stocks were in the green earlier this morning, as well. And here in the US, we're currently trading higher.
Here's what I’m focused on this morning:
Starbucks (SBUX):
The one-time high-flying seemingly indestructible coffee chain that sports those insanely delicious (and addictive, I might add) “fraps,” was out with its second-quarter earnings last night after the bell. At first blush, they looked like a train wreck. Revenues came in at a little over $2.3 billion, which was down from the more than $2.5 billion it put up in the comparable period last year. And EPS came in at $0.03 versus $0.15 in the comparable period last year.
However, at the end of the day, there were a few tidbits of good news that I think deserve a mention.
1. Excluding items, it put up $0.16, which was (hallelujah) a penny better than expectations.
2. It's cutting costs, which I think a lot of folks wanted to see. In the release, it said : “In the second quarter of fiscal 2009, the company delivered $120 million in cost savings, exceeding the targeted $100 million for the second quarter, and resulting in year-to-date cost savings of approximately $195 million.”
3. There was also some upbeat information regarding free cash flow. The following line in the release caught my eye: “...as announced in March, Starbucks fiscal year 2009 cash from operations is expected to exceed $1 billion, with resulting free cash flow in excess of $500 million.” 4. It seems the company is adamant about changing the perception people have of it. Reuters quotes its chief executive on a call as saying: “Starbucks coffee does not cost $4.” I think this is smart, and will make it better able to compete with the likes of Dunkin' Donuts and McDonald's (MCD).
But will this be enough to really draw in investors? The jury's still out. I have this sense that the tide is starting to turn at Starbucks, but I’m cautiously optimistic. Note that its comp-store sales were off a stomach-churning 8%, which isn’t something to write home about.
Stay tuned.
JDS Uniphase (JDSU):
I sense that the JDS diehards are probably yelling “Scoreboard!” at all the naysayers since the stock has bounced nicely off its lows. But the fact is, I still have no interest in becoming involved. Excluding items, the company lost $0.03 a share in its third quarter. That was in line with estimates.
But, toward the bottom of the release was this in all its glory: “For the fourth quarter of fiscal 2009, ending June 27, 2009, the Company expects revenue to be in the range of $265 to $285 million.”
Problem is, the Street is looking for it to generate more than $290 million.
As I said, I have no interest. This is a company that’s gotten pretty good at serving up disappointments. And rather than a shareholders meeting, I think they should have an awards ceremony for stockholders who have been so patient.
Finally, I’m banking that the stock gets smacked after the opening bell. If it goes below $5, I think it may have trouble garnering attention from the Street.
Insiders - where are ya?
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
