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Mondelez International, Inc. Message Board

  • shortyharris99 shortyharris99 Aug 20, 2010 1:56 PM Flag

    Kraft Long Term Assesment

    This is a negative commentary on Kraft's ability to deliver shareholder value over the long term. Day or short term traders looking for a point or 2 rise or drop need not read any further. Kraft's original IPO ten years ago was at about $30. Today's price is $30 dollars. During that time period Kraft has bought and assimilated other companies, each time claiming they would generate savings and economies of scale. Aquisition of Nabisco, Danone and recently Cadburry (among others) has added to the growth mystique, but is it good growth? All these are done for very sound business reasons, non of which Kraft management can ever seem to capitalize on. Identifying opportunites and then capitalizing on them are 2 different skill sets; Kraft management lacks in the latter. Execution of a detailed plan requires detail oriented,skilled people. Kraft is loaded with some very bright people that have a broad knowledge base, unfortunately lacking in depth skill sets(except power point presentations). The assimilation of Nabisco into the Kraft philosophy has not been successful and the cultural differences were great. The will of Kraft was eventually imposed. The knowledge base of skilled, dedicated people was eliminated, and simplistically nieve models were put in place. That,coupled with a revolving door policy of VP's and directors that have them shuffling around every 2 years, punching their tickets for promotion. It is a wonder that Nabisco can still make a cookie! Some say their shop floor losses are horendous. Kraft also had a disastrous assimilation of General Foods back when PM owned Kraft in the late 80's. Their deep knowledge base was packaged off wholesale. There is a basic misconception to this day that specific knowledge can be bought on the outside. True to a degree, but that doesn't include an in depth knowledge of your business and processes. Cadbury will probably be the latest victim to be dismantled by Kraft. The one shoe fits all mentality of Kraft thinking will stymie even the most open minded. I hope I am wrong and something good comes of that merger. But if history repeats itself, Kraft will under deliver again. An exodus of good employees (coerced or otherwise) can be seen, especially taking into consideration that Kraft is not on the same payscale level as Cadbury. So those of you that are holding Kraft expecting long term growth while picking up a 3% dividend, my advice is to go buy a company that really pays a good dividend, whose management has a track record of being able to capitlize on aquisitions and grow their business.

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