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Coca-Cola profit tops view; shares rise

Like other soft-drink makers, Coke's U.S. sales have slowed as consumers grapple with soaring food and fuel costs, declining home values and job uncertainty. Also, increasingly health-conscious consumers have been opting for drinks seen as good for you, such as bottled teas or vitamin-enhanced waters.

The company, whose brands include Minute Maid juice, Powerade sports drink and Dasani bottled water, said it is targeting $400 million to $500 million in annual cost-savings by the end of 2011.

Coke shares rose to $53.20 in premarket trading, up from a close at $52.34 on Wednesday on the New York Stock Exchange.

Coca-Cola sees $5.3bn writedown
By Jonathan Birchall in New York

Published: July 17 2008 16:46 | Last updated: July 18 2008 01:10

A one-two punch of higher commodity prices and increasingly frugal US consumers is forcing Coca-Cola’s largest bottler to write down the value of its business by $5.3bn.

The non-cash writedown by the bottler, Coca-Cola Enterprises, led Coca-Cola itself to take a $1.1bn writedown in its second-quarter results, reducing its earnings per share by 40 cents to 61 cents, 23 per cent down on the same period last year.

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APPLE DAILY

-- Coca Cola Hong Kong has started making its 11 brands of soft drink in a smaller can. However, retail prices of these 330ml cans are the same as the old 355ml cans.

Chinese juice makers may oppose Coke's Huiyuan Juice bid

2:27 AM ET 9/9/08 | Marketwatch


HONG KONG (MarketWatch) -- Chinese juice makers may file a protest to state regulators over Coca-Cola Co.'s proposed $2.4 billion bid for China Huiyuan Juice Group, according to reports.

Newswire reports, citing two mainland news journals, said Tuesday Chinese fruit juice groups were considering joint opposition to the deal, arguing the proposed takeover, which if successful would give Coke a dominant share of the market, would put them at a competitive disadvantage and threaten their survival.

The reports, which don't specify the companies considering taking part in the protest, said the jointly-signed statements would be sent to China's Ministry of Commerce.

Coke's (KO) takeover bid for Huiyuan, announced Thursday, would rank as the largest foreign takeover of a Chinese company, according to Thomson Reuters

Shares of Huiyuan Juice were up 1.6% at HK$10.10 ($1.29) in mid-session Hong Kong trading Tuesday.

If the acquisition were to go ahead Coke would hold a 37% share of China's low-end juice market, which makes up 70% of the nation's overall juice market, the Wall Street Journal Asia reported.

In the event the deal can't be stooped, Chinese juice companies will likely ask that Huiyuan be required to sell some of its brands and assets at a public auction, according to a wire report that cited the China Securities Journal.

The takeover is believed to have a good chance of being approved under China's new anti-monopoly laws which took effect in August, analysts said.

Coke's bid to buy China Huiyuan is pending government approval.

Deal likely to be scuppered by the Chinese authorities.

Published September 15, 2008
Coca-Cola has lost some fizz
Analysts blame wrong strategy but welcome its recent China takeover

(NEW YORK) This has been the wrong summer to invest in dark liquids. Crude oil has plunged and so have shares of the soft drink maker Coca-Cola.

Coke's decline has captured less attention, but it seems to have much in common - beyond colour coordination - with crude's reversal of fortune.

The weakness in oil has been attributed to reduced expectations for growth in the global economy, especially emerging markets, and to the recovery in the US dollar. Both developments are considered bad for Coke, too, because three-fourths of its revenue originates overseas; lower growth could mean lower foreign sales, and weaker currencies cut the US dollar value of those sales.

The result is a stock that has lost about 15 per cent in the last six months, approximately double the loss of the broad market. What shareholders must find especially disheartening is that this is the sort of environment - a recession or something close to it - in which producers of consumer staples like Coke are supposed to display resilience.

Coca-Cola's troubles are not confined to the last few months, and they are not all caused by the unravelling of the global economic boom.

The recent agreement to pay US$2.5 billion for China Huiyuan Juice is a wise move. It chisels away at Coke's dependence on carbonated drinks and expands the company's presence in a huge, fast-growing economy.

Repeated missteps by senior management have made the stock a long-term underperformer. It is down about 20 per cent since the start of 1998, a period in which the Standard & Poor's 500-stock index has risen about 35 per cent.

Some investment advisers think shareholders have got what they deserved. Jim Huguet, a portfolio manager at Huguet Associates, has been a longstanding critic of Coke's management.

Rivals like PepsiCo were quick to catch the trend toward bottled water and sports drinks and positioned their companies to benefit, he said. Over the last decade, he said, Coke continued to rely heavily on carbonated drinks and paid a price in stagnant sales.

'They could have bought Gatorade, which was up for sale and which Pepsi bought,' Mr Huguet said. He called Pepsi 'a much more innovative company than Coca-Cola' and added: 'When you talk about innovative leaders, Coke doesn't pop to the top of the list.'

But even he concedes that the company has taken steps to move farther from the bottom. The recent agreement to pay US$2.5 billion for China Huiyuan Juice is a wise move, in his view, because it chisels away at Coke's dependence on carbonated drinks and expands the company's presence in a huge, fast-growing economy.

That opinion is widespread. John Faucher, who follows Coca-Cola for JPMorgan, called the deal 'a long-term strategic positive' in a note to the bank's clients and lauded the 'long-term growth opportunities and the potential for some manufacturing synergies'.

He cautioned, however, that some investors might worry that Coke would buy back fewer of its own shares in order to have cash for the acquisition.

Ken Gau, an analyst at Waddell & Reed, is another fan of the acquisition. He described the announcement as 'one of the first things we've seen out of them in a while that's encouraging for longer-term growth'.

Mr Gau joined Mr Huguet in criticising the decisions made by Coke's bosses during the last decade and the sense of aimlessness that it produced. But he tends to see the bottle as half full rather than nearly empty.

He commended the firm's chairman E Neville Isdell for overhauling top management - including himself, when he stepped down as chief executive in July, placing Muhtar Kent in the post - and for setting the company in a direction likely to improve growth well into the future. -- NYT

Stats of the week: 73%

Percentage of Coca-Cola's revenue that comes from overseas.

Overall revenue for Coke increased 9% in the most recent quarter.

Why I'm Afraid of Bullish PEGs By Andrew M. Gordon

The PEG ratio compares a stock's price (as measured by the price-to-earnings ratio or P/E) with its earnings growth. When used correctly, PEG can help you find great companies.

But I suspect that these days it's misused more often than not.

P/E is one of several metrics that can help you get a handle on how expensive or cheap a company is. A PEG of 1 or less means good growth for the price. Above that, and the stock is probably overvalued.

I used to love PEGs of 1 or less. Whenever I saw one, I wrote in the margins of my notebook, "High growth expected."

Two years ago, this notation always meant "Good. The company is on a high-growth trajectory." When I write the same thing now, it means something entirely different. I think, "Gee, can this company meet its high-growth expectations?"

Let's take a look at Coke.

The forward P/E (based on expected earnings for the next 12 months) for the entire S&P 500 index is 12.42. Coke's is 13.02.

If Coke were expected to increase earnings at a rate of 13.02 percent a year over the next five years, its PEG (P/E divided by earnings growth) would be exactly 1.

With a 13.02 P/E, the last thing I want is a PEG of 1 or less. In such a case, the company would be expected to grow earnings by at least 13.02 percent a year. And in this global environment, that would be next to impossible.

But Coke's PEG isn't 1. It's 1.69. That makes its projected annual earnings growth a very achievable 7.7 percent.

The stock market is all about expectations. When a company disappoints analysts and investors, it can lead to a decrease in its share price.

With a PEG of 1 or less, that's a probable outcome these days. I don't go there anymore - and neither should you.

i just wana say....coke zero.... lim buay lo...(super lauzi tasting)