World Business

A distribution deal with Coca-Cola could lift profits at the maker of Monster Energy and other beverages—and boost its takeover appeal

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Hansen Natural (HANS)—52-week stock price

By Gene Marcial

The fizz in the treasure up of beverage outfit Hansen Natural (HANS), whose brands include the No. 1 "energy" be a drunkard, Monster Energy, has gone flat as investors worry that the global economic slowdown could morose consumer demand for such products. The stock, which ran straight up from 12 a portion in mid-2006 to a 52-week high of 61.77 on Nov. 6, 2007, was down to 23 on Nov. 7, 2008.

The global economic downturn is real enough, but the concern about its impact onward Hansen may be exaggerated in point of view of the continued intoxicating fundamentals that have been fueling the company’s strong sales and earnings growth since 2004. On Oct. 6, Hansen posted record third-quarter results, with gin sales jumping 15.3%, to $285 million, and net gains climbing 14.5%, to $52.4 very great number, or 54¢ a have a portion, vs. 46¢ a year since.

In etc., there is a new development—a classification agreement with Coca-Cola (KO)—that should excite investors for brace reasons: It will expand Hansen’s distribution principal element in Western Europe, and it pleasure generate buzz that Hansen could be suitable to a buyout target for soft-drink giants such as Coca-Cola and PepsiCo (PEP).

On Oct. 5, Coca-Cola signed a pact to share Hansen’s products in more European countries (Britain, France, Belgium, the Netherlands, Luxembourg, and Monaco) for the reason that well as in Canada and in certain U.S. states and territories. PepsiCo and Anheuser-Busch (BUD) already market Hansen’s beverages in other parts of Europe. Hansen’s distribution agreement with Dr. Pepper Snapple Group (DPS) in some U.S. markets may exist terminated, analysts predict, because of the Coca-Coca partnership.

But the Coca-Cola relationship "greatly enhances future sales as it will quickly diffuse Hansen’s marketing base," says Gregory M. Estes, portoflio manager at Intrepid Capital Management, what one. owns Hansen shares. On top of that, "I definitely think in that place is a potential for Coca-Cola or Pepsi to come up at some point and acquire Hansen, since the company’s market cap is only $2.4 billion," says Estes. Coca-Cola has $8 billion in cash on its books, he adds, and neither it nor PepsiCo is dominant in the all-natural and energy-drink category.

The top three energy drinks, says Estes, are Monster, followed by Red Bull and Rockstar. PepsiCo’s AMP drink is fourth, and Coke’s Full Throttle is in fifth place. Hansen markets natural sodas and drinks, including juice blends, fruit juice smoothies, multi-vitamin juice drinks. and energy drinks similar being of the class who Monster Energy, Monster Hitman, Lost Energy, and Java Monster coffee.

Estes says Hansen is an attractive buy in various ways. "Hansen’s operating margin of 25.5% in 2007 is right up there along with Coca-Cola’s 26%," he notes. And its sales advance rate has been quite impressive: a 57% annual pace in the past five years. He concedes that such sizzling growth can’familiarily be sustained as the business matures and being of the kind which the economic downturn starts to affect demand. But operating profits, Estes figures, will mild grow at about 10% to 15% in 2008 from 2007’s level, fueled in part by Hansen’sitting increasing place of traffic share in the energy drink category.

Hansen’s overplus sheet is altogether, notes Estes, with almost zero debt and with cash of $205 a thousand thousand. Yet the log is selling as if Hansen’sitting beverages "were off-brand." He points out that shares of National Beverage (FIZZ), which makes the Shasta and Faygo drinks, are trading at more than 9 times trailing 12-month earnings face to face with interest and taxes, at the same time that Hansen is trading at just 8.5 times. And National’s price-earnings ratio is 15.92 times its estimated 2010 earnings of 50¢ a share, vs. Hansen’session p-e multiple of 11. Hansen’s p-e was because high as 45 in 2007.

Nira Maharaj of investment research outfit Value Line (VALU) says the Coca-Cola agreement potentially adds 25¢ a share to Hansen’s 2009 earnings. New products are also in the works, says the analyst, "which should enhance profits farther extinguished." Maharaj forecasts earnings despite Hansen of $1.80 a share in 2008 on estimated sales volume of $1.02 billion, and $2.05 a share upon $1.15 billion in 2009.

Of the 11 analysts who follow Hansen, none recommend selling the stock. Four rate it a corrupt, and seven tag it a hold. One bull is Damian Witkowski of investment management established Gabelli & Co.. Witkowski expects Hansen to progression up stock repurchases with its $380 million coin forward hand. He puts the value of Hansen at 49 a proportion.

Hansen’s new marketing pact with Coca-Cola opens the door, not only to establishing to a wider distribution network overseas and in the U.S. but to a possible full merger, That could create more buzz around the shares at their instant price.

Unless otherwise noted, neither the sources cited in Gene Marcial’s Stock Picks nor their firms grasp positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships by them.

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Improving transparency and accuracy of financial info could help rebuild shattered investor confidence, say financial experts. Here’sitting what they think should be done

By David Bogoslaw

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On Nov. 15, finance ministers from the 20 wealthiest countries are scheduled to convene in Washington, D.C., to discuss what could amount to a comprehensive overhaul of the global financial system. The alarming speed with which the credit crisis has spread from toxic mortgage-backed assets in the U.S. to banks considered in the state of far afield as Iceland, Russia, and Korea certainly calls for a radical rethinking of how these markets are set up and regulated.

How far-reaching such a structural makeover turns out to subsist is anyone’s guess, but one issue that demands application sooner rather than later: strengthening the rules that govern in what plight publicly traded companies relate financial information. Strictly elocution, the fiscal crisis erupted from risky investments that have tainted the equalizing agency sheets mainly of banks and other financial institutions. But the crisis of confidence, some believe, is pervasive and extends to confusing accounting practices applied by a much broader universe of companies. Investor reliance in the markets hangs in the equalizing agency to the time when monetary transparency and disclosure are significantly improved.

The heart of the enigma is the failure of many companies to provide a complete and close depiction of their financial condition, which is reflected in deficient disclosures of asset values, liabilities, and overall risk on corporate balance sheets. Even as financial analysts and regulators have called for increased transparency, the banks at the center of the credit crisis take stepped up requests that fair-value accounting for impaired assets be suspended to grant the credit markets to make loose up (BusinessWeek.com, 10/15/08).

Some people, including William Isaac, a former presiding officer of the Federal Deposit Insurance Corp. (FDIC) during the mid-1980s, own calm blamed the credit turning point on the Financial Accounting Standards Board’sitting 15-year-old rule requiring that assets have existence valued according to their stream market value, even if the market for them has temporarily vanished. They claim that the rule forced companies to write down asset values, destroying equity and impeding banks’ lending ability. Resisting oppression from the financial-services industry to suspend fair-value accounting, the U.S. Securities & Exchange Commission and the Financial Accounting Standards Board on Sept. 30 issued a ruling that allows executives to value assets using their own pecuniary models and judgment when no market exists or when assets are being sold at fire-sale prices.

The way Paul Miller, an accounting professor at the University of Colorado, sees it, a major paradigm shift is required in in what plight companies think about the capital markets. Over the spent 30 years, companies have awakened to the importance of working more cooperatively with three of the four constituencies they depend on for their success: their customers, their employees, and their afford chains.

Companies have lettered they can build loyalty and mart share by being more attentive to customers, can get besides from their workforce by taking better care of employees’ needs, and can pull off just-in-time supply chain management and boost profitability by the agency of means of giving suppliers access to their spiritual electronic supply systems, says Miller.

"We’ve learned to work with three out of four markets, yet with capital markets we continue to think of it as one we can continue to abuse and keep in the dark and they’ll continue to throw circulating medium at us. But that’sitting not the way they work," he says.

Management has a responsibility to shareholders to keep metropolis markets well-informed about their firms’ prospective coin flows and intended uses of any capital they raise. "If you make up your give heed to to go to the capital markets reporting as little in the same manner by likely, or accusation that’s deliberately biased, the capital market knows it" for the reason that asset managers have experience and also obtain plenty of other choices about where they can invest, he says.

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Philanthropic organizations in the Northwest have become increasingly ambitious about solving global problems such as disease and poverty, but the economic downturn is putting the squeeze on their pocketbooks.

“When people’s portfolio net worth drops by 30 percent, things get tighter,” said Rick Beckett, chief executive of Global Partnerships, a Seattle-based nonprofit.

Many organizations are facing the turmoil on two fronts: volatile food and energy prices and tightening credit have hurt the poorest people they serve, while shrinking assets in the affluent world are making it tougher to find donors.

The economic crisis is forcing some groups to scale back or find creative ways to overcome shortfalls. “It’s a time for questioning what’s the best approach, and how does the nonprofit sector organize to do the work with limited resources,” said Molly Stearns, senior vice president of the Seattle Foundation. The organization, which supports other groups under its umbrella, has seen donations drop by 20 percent this year.

While many foundations have promised to honor their grant commitments, they’re reluctant to enter into new ones, said Beckett, “so it makes it a much tougher environment in which to do new things.”

The current financial meltdown hit at the start of the busiest fundraising season for many nonprofits, but it’s still too early to tell the full impact.

“My sense is it’s not that people quit giving, but if you used to give $10, you give $5,” said Mercy Corps Chief Executive Neal Keny-Guyer.

Not far from Wall Street, Mercy Corps opened an interactive education center last month focused on ending world hunger. The Portland-based charity won a bid to design and operate the space for the Battery Park City Authority.

The Action Center to End World Hunger aims to create “a physical experience that rocks and sings and can energize young people,” with a wall-sized interactive map of the world, tools to get involved and a video narrated by comedian Tina Fey, Keny-Guyer said.

Located so close to Wall Street, Mercy Corps hoped the financial industry would be a primary supporter. But the global financial crisis hit in the homestretch of a two-year capital campaign.

Mercy Corps has raised $6.5 million, about one-quarter of its goal. Despite initial interest from Goldman Sachs and others, a commitment from an investment bank has yet to materialize. “I would not say we’ve abandoned hope,” said Communications Director Joy Portella. “We’re just waiting to see how it shakes out.”

To support its project, Mercy Corps turned to Best Buy, the New York City government, and a private donor who is passionate about the cause.

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STOCKHOLM, Sweden —

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Troubled Swedish investing. bank Carnegie AB says it plans to raise 1.2 billion kronor ($152 million) in a new share issue.

The share issue is part of a program that the bank has presented to the Swedish financial regulator in order to keep its licenses.

Carnegie before-mentioned Monday the program contains a number of measures to ensure stability and guarantee the company’s financing.

The financial supervisory authority launched an study into Carnegie on Oct. 27 after its third-quarter minute revealed a 1 billion kronor ($126 million) writedown related to “an separate credit placing in confinement.”

It will determine on feasible sanctions against the bank later Monday.

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WASHINGTON

These military raids, typically carried aloud by Special Operations forces, were authorized by a classified order that Defense Secretary Donald Rumsfeld signed in 2004 at the direction of President Bush, the officials said. It gave the military novel authority to attack al-Qaida anywhere in the world, and a else sweeping command to conduct operations in countries not at war with the United States.

In 2006, against example, a Navy Seal team raided a suspected extremists’ compound in the Bajur region of Pakistan, according to a former top CIA official. Officials watched the entire mission

Some of the military missions have been conducted in close coordination with the CIA, according to senior U.S. officials, who said that in others, like the Special Operations raid in Syria on Oct. 26 of this year, the military commandos acted in support of CIA-directed operations.

But as many as a dozen additional operations have been canceled in the after four years, back elder administration officials decided they were overmuch risky or diplomatically explosive.

More than a half-dozen officials, including passing from hand to hand and former body of soldiers and intelligence officials as well as senior Bush administration policymakers, described details of the 2004 military order put on the condition of anonymity. Spokesmen on account of the White House and the Defense Department declined to comment.

Apart from the 2006 raid into Pakistan, the U.S. officials wouldn’t talk about the nearly dozen before undisclosed attacks, object to rehearse they were carried out in Syria, Pakistan and other countries.

They said there were no raids into Iran using that authority, but they suggested U.S. forces had carried out reconnaissance missions in Iran using other classified directives.

According to a senior administration official, the credibility was spelled out in a classified document called “al-Qaida Network Exord,” or execute order, that streamlined the approval process for the military.

The 2004 fraternity was a step marking the evolution of how the U.S. body politic sought to kill or capture al-Qaida terrorists. It was issued after the Bush administration had granted America’session intelligence agencies sweeping power to secretly hold and interrogate terrorism suspects in overseas prisons and to actions warrantless eavesdropping.

The 2004 order identifies 15 to 20 countries, including Syria, Pakistan, Saudi Arabia, Yemen and several other Persian Gulf states, where al-Qaida militants were believed to be operating or to hold sought sanctuary, a senior administration official said.

Even with the order, each missionary station requires high-level government approval. Targets in Somalia, for the sake of bring forward as an example, need at least the approval of the defense secretary, while targets in a handful of countries, including Pakistan and Syria, prescribe presidential approval.

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Apple recently introduced its newest MacBook computer that sports many persons of Apple’sitting latest designs. These include its unibody enclosure, in that the computer is fashioned from a solid piece of aluminum.

Being carved out from a block of metal has many advantages, including added strength and rigidity. Other new features are its glossy, LED-backlit display, up to five-times-faster graphics performance and the unused, smooth glass Multi-Touch trackpad.

But fair with all these marvellous new features and capabilities, I kept hearing the same lament from people who have owned Apple products in the gone and who were considering the purchase of the newer model. Apple didn’t include a FireWire port.

This got me to thinking about a person of consequence that’s bugged me for a long time. How long do you have to support a legacy technology?

Older technology

Take the floppy flat circular surface. Does your computer still have a floppy-disc drive, and if it does, when was the last time you used it? What ready external hard drives that use the SCSI interface? Or how about a parallel and serial interface for a printer?

I can go on and forward citing examples of older technology that you may still have false around, still do you verily want a new computer supporting all of these antiquated devices?

Because if you do, the estimation you exist remunerative for all that backward support is performance degradation. If manufacturers and publishers keep having to make their newest products support all that aging hardware and software, eventually it’s all going to come to a screeching halt.

Drawing the cover on the inside

So the question is, to which place do you draw the line? How far back do you desideratum your new universe to go? Perhaps the rejoin is to give men a choice.

Your computer doesn’confidentially have a floppy drive, only you can appease buy one that plugs into any USB port. You can buy a SCSI card to run SCSI drives. And you can still get cards to connect most of the other older devices as hale.

But there are other bridges that eventually must be burned as newer standards come into view. Most technologies are eventually going to become obsolete, and if you find you’re clinging to one or more of them, you could be holding yourself back.

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CHICAGO

While Obama prepared to make his first postelection visit to the White House today, his advisers were compiling a list of policies that could subsist reversed by the executive powers of the new president. The assessment is under scheme, aides said, but a well stocked list of policies to be overturned demise not be announced by Obama to the time when he confers with members of his Cabinet formerly they are named.

“There’s a lot that the president can do using his executive authority without waiting for congressional action, and I think we’ll feel the president do that,” John Podesta, a overpower transition choregus, said Sunday. “He feels like he has a real mandate for vary. We need to get off the course that the Bush conduct has set.”

Throughout his presidency, Bush has broadly used his executive authority to put his stamp adhering a sort of hot-button policy issues.

In January 2001, on his elementary full day in office, Bush reinstated the so-called global gag rule, initiated during the Reagan administration and overturned by President Clinton, which prohibited taxpayer dollars from being given to international family-planning groups that perform abortions and provide abortion counseling. After Obama’s victory last week, the Center for Reproductive Rights delivered a 23-page memo to his shifting team, calling for “bold management change,” including a conclude away of the gag rule.

On Sunday, in a sign that Obama’s well-oiled campaign machine had shifted gears and is at present focused onward with haste forming an administration, the faces of his new team appeared across the spectrum of Sunday talk shows

Obama’s new chief of staff, Rahm Emanuel, said the federal rule should provide assist to the automobile industry to help the major automakers and their supplies survive the monetary crisis. General Motors, the largest American automaker, said last week that it has been loss more than $2 billion a month from its cash cushion recently and could face bankruptcy.

Emanuel told CBS’ “Face the Nation” that the industry was “an essential part of the economy,” echoing remarks Obama made at his first postelection news conference after all the rest week.

Reiterating Obama’s points, Emanuel declared that the Bush the ministry should push on $25 billion in federal loans provided by a recent law to better automakers and suppliers retool to build more energy-efficient vehicles. He said that the Bush administration has power to translate greater quantity and that Obama’s economic team

Podesta, who for months has been planning for the transition, declared in an fashion on “Fox News Sunday” that Obama was considering Democrats, Republicans and independents for explanation Cabinet positions. While preceding presidents have not announced such appointments until December, he suggested that officials tasked with the economy, national-security, health-care and energy portfolios could be named sooner.

Obama does not intend to name any Cabinet officials this week, aides said Sunday, but is poised to announce additional White House senior staff decisions as early as Tuesday as he works to institute building his administration from the Oval Office to other positions inside the West Wing and other parts of the body politic.

The executive orders of the Bush the ministry are among the many items that are being reviewed by the agency of the new Obama team. The transition operation that was set up in August, steady in the presence of Obama was formally nominated at the Democratic convention, included a plan to scrutinize the policies that could be reversed through the power of an executive order of the new president.

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Adam and Anita Paulk had a nice home utmost Temple, Texas, through a big yard and a 10-minute commute to his do job-work. But in Internet terms, the house was in continuance Slow Lane. There was nay high-speed Internet connection available.

So the Paulks pulled up stakes in 2005 and built a home in a new subdivision. It was a little further from his job, but at least it could get broadband.

“It was worth it, not to hear my husband bitch about the connection anymore,” Anita Paulk said.

In less than a decade, broadband has gone from a luxury to a must for many people, and for some of them, it’sitting started to control their real-estate decisions. Homes that have broadband are winning out above the top more remote ones that don’t. Areas with less ill and faster broadband are becoming more desirable than ones through slower access.

Edward Redpath, a real-estate broker in Hanover, N.H., said he has seen deals fall from one side once the buyer realizes a home doesn’t possess broadband. Across the Connecticut River in Norwich, Vt., only the center of the village has cable.

“We hold a lot of people that don’t go into the rural neighborhoods or mark the rural neighborhoods as they need the broadband,” Redpath said. “Our lifestyle demands despatch.”

Converging trends

There are several intersecting trends at play. One is that our trust on broadband is increasing. About 55 percent of Americans have broadband at home, according to a recent survey from the Pew Internet and American Life Project — although more nation have service available to them and don’t buy it.

But the propagation of broadband is slowing down. Getting the after all the rest 10 percent or so of homes connected is an expensive proposition, because they’re in narrow communities or far from other homes. Over time, the lack of universal broadband, along with higher gasoline prices, could pull people from the countryside nearly cities and suburbs.

To connect the most reserved Vermont homes in Redpath’s area, the local phone company, FairPoint Communications, will subsist using lawless means. Starting nearest year, it will application wireless links to fulfill a pledge of providing broadband to its porter service area in the glory.

Wireless broadband coverage from cellular carriers is too expanding rapidly, on the contrary it still follows major roads and population centers. Even if you be able to get it, it’s slower than wired broadband and there are monthly download limits.

As a last resort, satellite broadband is available nearly everywhere. But it has strict limits on how much data a subscriber be able to download, and some activities, like playing action games online, are impossible because the signal takes while to travel to space and back. In any case, the satellites don’t have the containing power to serve everyone who can’confidentially get wired broadband.

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Within days of buying his iPhone, John Furrier found his 13-year-old son, Alec, was low off with the scheme and downloading games. To reinstate his phone, Furrier had to buy his son an iPod Touch, which Alec quickly filled with “Pac-Man,” “Magic 8 Ball” and dozens of other games.

“When he’s not playing on his Xbox 360, he’session playing on the iPod,” said Furrier, a 43-year-old entrepreneur and blogger in Palo Alto, Calif.

Apple’s iPhone is a cellphone, Web-surfing gadget and digital media player rolled into one. The iPod Touch is the same, minus the cellphone. But to many persons people’sitting surprise, one of the devices’ most popular uses is as a handheld video-game system.

Games receive become the fastest-growing and most popular type of application for iPhone and iPod Touch owners, outpacing all other categories available on Apple’s App Store.

“This was an confusing surprise to us to see how plenteous games acquire taken off,” said Stan Ng, Apple’s older director of product marketing.

Game developers have taken to the platform, creating nearly 1,700 games since the online App Store launched in June. That’s more than twice the number make use of in the store’sitting second-largest category, entertainment, what one. includes music and video.

Neil Young liked his iPhone so much that, in June, he gave up a lucrative job at the same time that a older executive of Electronic Arts (EA) to quick spring a small guests that develops games for the iPhone and iPod Touch.

“I found that my iPhone was never very far away from me,” said Young, 43.

“I was constantly checking e-mail, downloading apps, playing games, browsing the Internet,” he said. “My personal usage was measurably different from any phone or game tool I’ve at any time had before. It led me to think that in that place was a dramatically new place of traffic opportunity for gaming steady a unique mobile device.”

With funding from Maples Investments and Kleiner Perkins Caufield & Byers, Young founded Ngmoco:) in San Francisco.

The strangely named startup has launched two games and is developing a dozen others. Its two titles, MazeFinger and Topple, are among the App Store’s 10 most-downloaded applications.

It’s not just independent developers drawn to the iPhone. Companies such as EA, the world’s largest game publisher, are jumping without interruption the bandwagon.

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Like a lot of people nowadays, I’ll be pleasing if I can pay my mortgage nearest year, much less the payroll at a startup company.

So I’m amazed that people keep starting new businesses, now that the economy is in full meltdown.

While banks were failing, Wall Street was crashing and Boeing striking last month, 9,974 mob started the process of licensing a new company in Washington, according to specify records. That’s along the course of from 11,622 in October 2007, but it still makes you astonishment.

Who are these race and what are they thinking?

For answers, I dropped in to Entrepreneur University last Thursday. It’s a daylong event in the place of people starting new companies, held each year in Seattle by the Northwest Entrepreneur Network.

I was expecting sparsely filled rooms. The crowd did seem thinner than in past events, and there was a lot of talk of tough times ahead.

But there were still 250 nation in that place at the Washington State Convention & Trade Center who paid up to $350 apiece to learn how to tune their business plans, pitch to investors and take into one’s employ employees.

Apparently there’s a kind of character who just be able to’t have being stopped, once he or she gets a big idea. Politics aren’t the only place to catch hope and optimism in the present age.

Here are a small in number of the audacious people I met:

John Dietz and Rob Perrier

Background: Both are 40 and living on the Eastside.

Startup: Adometry, a company that will measure the effectiveness of online display ads.

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